Plastic Bottle Tax (Chain of Analysis)

This short revision video provides an example of how to build a clear chain of analytical reasoning on the issue of whether the government should introduce a specific tax on single use plastic bottles and cups.

One aim of an indirect tax is to increase the private cost to consumers of buying products that use lots of plastic packaging.

Aspecifictax on the manufacturers of drinks sold in plastic bottles will causea rise in their costs. This is shown in my analysis diagram.

If demand is price inelastic, then manufacturers will be able to pass on most of the tax to consumers through higher prices.

As a response, suppliers may reformulate their products so that less plastic is used in the manufacturing process.

This leads to a reduction in the amount of plastic waste that potentially heads to landfill sites.

As a response, suppliers may reformulate their products so that less plastic is used in the manufacturing process.