732 B
732 B
Tax on Necessaries
Definition
A tax imposed on goods that are essential for life or considered necessary by social custom, which raises the price of these goods and consequently the wages of labour, ultimately falling on landlords through reduced rent and on consumers through higher prices.
Source Chapter
Book V, Chapter 2
Context
Smith argues that taxes on necessaries are particularly burdensome because they affect the poor most heavily and raise the cost of production throughout the economy, making them less desirable than taxes on luxuries.
Economic Domain
General Theory