This article discusses the difference between necessity and luxury goods, their demand elasticity, and the impact of taxes on their consumption and tax revenue. It explains that luxury goods are desirable but not necessary, while necessity goods are purchased by all people regardless of income. It also explores the reasons why Adam Smith preferred to impose a tax on luxury goods and the costs involved with the imposition of a sugar tax. Additionally, it discusses the effects of a tax on sugary drinks and the imposition of a subsidy on the consumption of salads.