Chapter 3

The article: http://www.ausfoodnews.com.au/2008/11/24/alcopop-tax-loophole-to-be-closed.html

This article is about the Australian government catching alcopop companies finding loopholes in paying excise taxes. Excise taxes have been imposed on alcopop products in the hopes of trying to reduce alcohol consumption. Independent Distillers, one of Australia's alcopop companies, found a way out of the tax, which is making an alternative drink with the taste being very similar to alcopop. They strip the beer taste, leaving the alcohol in which they mix with fruit juices and other flavours. This alcoholic drink became known as 'Bolt'. This drink only has a $39.40/litre excise tax, whereas the regular alcopop tax is $66.70/litre. The Federal Government found out about this, and is now banning the further production of Bolt. Independent Distillers, however, still denies that this was not a form of a loophole.

This article connects to textbook in a sense that it explains the concept of excise taxes. Excise taxes, in the textbook, is explained as a tax levied by government on the suppliers of certain products. This tax only affects the suppliers and not the customers, and is usually a source of government revenue. The alcoholic products, such as alcopop, have been taxed for containing alcohol, which is what caused the Independent Distillers to create this alternate drink, to avoid paying so much excise tax. From the decrease in the excise taxes, they are able to lower their prices for the consumers as well, The article is an example of what companies would be willing to do to dodge excise taxes, although eventually, the government would probably find out, and stop the loophole.

I believe that although the main reason of excise taxes is to create a greater revenue for the government, part of it is also to reduce the amount of alcohol consumption. The Independent Distillers who made the new product, 'Bolt', is making an unethical choice of creating this in order to avoid paying the full excise tax. It's understandable to see why they are doing this, in order to increase their profit, but at the same time, they're decreasing the government's revenue as well. I think this situation resulted in the government being more alert that there may be more loopholes out there. This may cause the government to create stricter regulations on suppliers, and they will be certain to keep a closer eye out for companies like this.

Chapter 1 - Scarcity and Opportunity Costs Revised

The article:http://ap.google.com/article/ALeqM5h5JRwPgiiw1s1OQ2nMg0svKpPEZwD939H3FG0

The value of gold in New York was briefly increased over $900 an ounce on Thursday, September 18th, 2008. The rapid increase in the price of this resource from Wednesday to Thursday was the largest one-day increase ever. Possibly the most important thing that resulted in this was the advantage the government took of this resource. The government recognized the opportunity to save their banks from the debt that has been following them for a while now. Although gold seemed to languish for a while, it recently proved to regain its valuable power. Not only did the gold help the government, it also helped investors, as they often find gold as a safe place to put their money. Another advantage is that the gold is known to hold a fairly consistent value, even over a long period of time.

My article is mostly about how the value of gold has been consistent throughout time. Gold is a scarce resource that alters in value from time to time. On September 18th, the value of gold greatly increased, and the government took advantage this situation and used this resource to pay for their debts. This connects with two topics in the textbook. First of all, the government had to make a decision on how to use this resource. This ties into economics because a part of economics is about making decisions on using scarce resources. Secondly, because the government chose to invest their money in paying bank debts, opportunity costs appear. Some opportunity costs would be that the government is now unable to do other things with that gold or money. The opportunity of having roads fixed, or building new schools is now lost.

Personally, I think the country was very lucky there was an increase in the value of gold, and that paying the debts would have improved the economy in a way that the banks will now be able to lend out more money. Despite this, though, I also think it was really unfortunate that the government had to put the gold into paying their debts. I think it would have been a greater contribution for the people of the country if that money was spent on something more useful, such as fixing roads, or building things to improve the living environment. I could understand how this could be a difficult decision for the governemnt, but I think the opportunity costs of using the gold to help the citizens directly has a greater long term effect. I'm quite curious on what the government will decide to do next, if there ever will be another rapid increase in the value of gold.