How can government intervention through taxation effectively address negative externalities in consumption, while also enhancing welfare economics?

Government intervention through taxation can help reduce negative externalities in consumption, which are the harmful effects that some choices have on others. For example, when people smoke in public places, it can harm non-smokers through secondhand smoke. By imposing a tax on cigarettes, the government makes smoking more expensive, encouraging people to smoke less. This not only reduces the harm to others but also generates revenue that can be used for public health programs, improving overall welfare. Therefore, taxation serves as a tool to correct market failures and enhance the well-being of society by discouraging harmful behaviors.