Reader question: Please explain this sentence: Alcohol tax hike cuts two ways. My comments: Or it cuts both ways, meaning an alcohol tax hike has its advantages as well as drawbacks. If a government raises alcohol tax in order to raise revenue, for example, it will succeed – to some extent. But a tax hike has consequences the government may not want to see. A tax hike means higher prices for all alcohol beverages. A higher price often hurts sales. A drop in sales in turn means less business in general, which is bad for everybody all around and which eventually leads to diminishing taxes for the government to collect. That’s a simplified example, of course. In raising alcohol taxes, the government may not care about a dip in sales so much. It may have other benefits in mind. Higher prices may force people to drink less, which means, for example, fewer drink driving cases, less domestic violence because of drinking and fewer hospital visits as a result of binge drinking. Overall, the benefits may easily outweigh the drawbacks. Still, a tax hike has its drawbacks, and that’s what “cuts both ways” means here. The phrase “cutting both ways” originally addresses the double-edge nature of swords, knives and things of that nature in general. Cutting both ways? Yeah, both this way and that way. A knife cuts forwards and backwards, on the left side and on the right side. |