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# Tax on Luxuries

## Definition

A tax imposed on goods that are not essential for life and whose consumption
is optional, which falls directly on the consumers of these goods without
affecting the wages of labour or the prices of other commodities.

## Source Chapter

Book V, Chapter 2

## Context

Smith considers taxes on luxuries to be more equitable than taxes on necessaries
because they are paid voluntarily by those who choose to consume such goods,
and they do not have the broader economic effects of raising wages or prices.

## Economic Domain

General Theory

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