Corrective tax意思
"Corrective tax" is an economic term that refers to a tax imposed on a good or activity to account for externalities, which are the costs or benefits that are not reflected in the market price of the good or activity. Externalities can be either positive or negative.
A corrective tax is designed to "correct" the market outcome by internalizing the externalities, thereby encouraging producers or consumers to take into account the full social cost of their actions. For example, a tax on cigarettes is a corrective tax because it aims to account for the negative externalities of smoking, such as the healthcare costs associated with smoking-related illnesses and the negative impact on non-smokers (passive smoking).
The purpose of a corrective tax is to:
- Reduce the consumption or production of goods that generate negative externalities.
- Raise the price of these goods to reflect their true social cost, which includes the external costs.
- Allocate resources more efficiently by ensuring that the private cost of a good or activity is closer to its social cost.
By doing so, corrective taxes can help to:
- Reduce pollution
- Encourage the development of cleaner technologies
- Protect public health
- Promote sustainable development
In the case of positive externalities, such as the production of goods that have spillover benefits for society (e.g., education, research, and development), a corrective tax might take the form of a subsidy to increase the supply of these goods and make them more affordable, thus encouraging their production and consumption.
Corrective taxes are also known as Pigouvian taxes, named after economist Arthur C. Pigou, who argued that taxes or subsidies could be used to correct market failures caused by externalities.