703 B
703 B
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