IMPLICATIONS OF HEAVY TAXES ON NECESSITIES

The taxes implemented are to enable any government to be able to sustain its operations, improve the welfare of its citizens through the provision of services that are considered important and can be out of reach to some of its citizens.

What happens when the basic commodities and things that are regarded as necessities are subjected to heavy taxes? 

The increase in the gap between the rich and the poor increases massively. The unemployment rate becomes so high and the anticipated mental health problems will increase, rate of suicide and crime rates among others.

The health facilities will become heavily burdened with some of the cases which could have easily been resolved with healthy diets and leading to overworking the ones who are already serving the community at large.

Increased cases of tax avoidance and evasion cases in the society which will defeat the very essence of wanting to collect more revenues.

The death of upcoming industries which were meant to help in the production of local products that are to be more affordable hence leading to increased importation.

Low GDP of a country and a huge population of individuals who have lost hope of succeeding.

Capital flight for those who are able to invest and create more opportunities for the ones within the country. This also means the country will undergo along recession period.

The government drowning in debts and unable to pay them. In finance, it is usually said countries cannot declare bankruptcy but the actual activities on the ground contradict the very statement. We have seen countries such as Greece going bankrupt in 2019. They are not the only countries in the history that have gone bankrupt; Iceland in 2008, Argentina in 2001, Russia in 1998 and Mexico in 1982. They all underwent the biggest depression in history and managed to revive the economy, this is not what any government would like to go through especially in Africa.

What lessons can most governments learn during the recent pandemic and associate with the previous crisis that affected several countries in the world? Better fiscal and monetary policies should be implemented after carefully reviewing its implication on the economy at large and save situations before they get out of hand.