Government and the private sector both struggle to have a good economy that is financially successful. I bet that only the private sector alone which is suppressed by the government due to impositions of high taxes. Economy is a large vicinity consisting of people and their property in a nation how they influence with one another with the government. A good economy is faced by the problem of drawbacks which include:
1) Alcoholism :
Alcohol is one of the main things that lead to poverty and an unhealthy generation. This is because the alcohol is an addictive drug for which the consumers might not do anything without it. The cost of producing alcohol by the government is high. This is due to:
Giving a name to a beer company and making sure it is satisfactory to the consumers and the company outstanding among others in the market is costly. This makes the price of beer to go high while a soft drink remains cheap.
2) Expensive labour:
No alcohol is produce by cheap labour. The labour employed to work in a brewery is much expensive. For instance, for a complete and safe brewing to be done, there should or must be chemical engineers who properly analyse the necessary ingredients.
3) Lack of enough raw materials.
Without advocating for alcoholism to proper, lack of raw materials for making beer leads to high pricing of alcohol in a state. For example, alcohol is much expensive in the United States of America since there is no irrigation of beer berries.
2) Imposition of high taxes.
Tax is the amount payable to the government by a firm or an individual as required by the law governing a state. Imposition of high taxes by the government is likely to lead to high pricing of products and services in a state. This is one of the reasons which may discourage international investments from taking place. Imposition of high taxes results to:
1) Reduced manufacturing of goods.
Due to high taxes, firms are not able to produce many goods to people as the cost of production is increased and therefore the goods produced are few but very expensive. When there is reduced manufacturing due to high taxes, the state does not grow its economy since there is an impact of less taxes. Government earns enough tax when there is high production of goods at a less cost and sale of goods at an affordable price.
2) Discouragement of international investments.
A state usually functions well when it attracts international investors from outside to come and invest in the state. By doing so, there is high creation of government revenue why taxes are low since there is higher sale of goods and services by the international investors. When taxes are high, investors are not able to move to other countries to invest there.