What Are The Advantages And Disadvantages Of Junk Food

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The article is about Kerala state government's tax proposal on junk food, such as pizzas,

burgers, and other junk food which are served by any restaurant. The movement is

projected to put an end and abstain people from the consumption of junk food. The

government of Kerala was not the first to levy fat tax on junk food, Denmark and Hungary

have adapted this system before Kerala. Nonetheless, junk food is a demerit good that is

when produced creates negative externalities of consumption on third parties, this is an

example of market failure since there’s over-allocation of junk food. However, the total

benefit of society (MSB) end up being much less for the individual consuming the product

(MPB), which results in over-consumption …show more content…

The government collects the tax to provide free treatments within its

citizens.

Moreover, the indirect tax has its pros and cons. There are numerous advantages and

disadvantages that occurs after imposing the indirect tax. The disadvantages are the

disposable income of the consumer decreases, due the large increase in price. Therefore,

reducing the disposable income of people who consume junk food, which then leads to a

decrease in their living standards. Nevertheless, the indirect tax is a regressive tax,

meaning, rich people pay a less proportion of income as tax, by definition tax is a fixed

amount of tax on consumption. No matter if you’re poor or rich, you will still pay 14.5%

more for every kg of junk food, furthermore, the increase of 14.5% is deemed as a small

amount for rich people, whereas poor people perceive its expensiveness; thus, increasing

the income inequality and most of the expenditure is from middle class and poor class, this

makes it more detrimental. In contrast, the price elasticity of demand for junk food is pretty

low, the government’s revenue tends to be high, since tax per unit multiplied by units.

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