Disposable Goods Targeted by new French Tax Plan
Technology has not come without its demerits. Today, one thing that technology has been able to achieve is an easier and more comfortable life for people. This has been made possible by the easy to use, easy to dispose products that they have introduced to the market. Although we save more time and find these products easier to use, the environment suffers the adverse effect that come with the disposal/pollution of these products.
Therefore, the French government is planning to reduce the cost, pollution and the effect that these disposable products cause in the society at the same time; they are trying to imbibe the culture responsibility in the people. They are also trying to reduce the populations overall consumption of energy. The negative externalities here is that this taxation would harm the growth of production companies and this would have an effect on economic growth.
In order to drive home the point, the French government is devising a method of tax on disposables and subsidies on energy effective products that would make the people to be forced to concede to this plan. However, this system of taxation and subsidy bears its own consequence too. In the case of disposables, two things can happen. The first thing is that if the tax is applicable to the producers, the price of the disposable products will escalate.
On the other hand, if the tax is on the consumers, the supply would be the same and but demand for the products would be reduced. Overall, there would be reduction in supply in a lower proportion. However, in the case where subsidies are given on fuel-efficient cars, demand for these cars would be higher. Considering the deadweight losses, the externalities can not be reduced.