[djm]

That might not work as well as we might wish. A substantial amount of spending in most first world economies results from spending money earned by illegal drug sales. (I don't have figures to quote. A pretty good book came out I think ~10 years ago that was about the contributions to various economies from spending as a result of criminal enterprise but I'm afraid I can't recall what it was called or find it on google now).

If you legalise and apply tax the government would see additional sales tax revenue but also a reduced corporation tax revenue.

I imagine they'd still be better off by a long shot because they'd likely spend less money fighting drugs related crime, and also because legalisation seems likely to increase consumption.

[arethuza]

"reduced corporation tax revenue"

Since when do criminal gangs pay corporation tax?

[djm]

I meant corporation tax revenue from businesses that gain income by selling stuff to people who are paying with drugs money.

edit: I'm not sure I'm explaining myself very well so let me just spell it out:

If it was legalised and taxed they would receive sales tax income (VAT or whatever they call it in greece), and probably additional tax income from likely "harmful substance" taxes (like those applied to alchohol, cigarettes, petrol etc). At the same time the folks who had been selling drugs illegally would lose income and thus reduce their own spending in the economy.

The result would be increased revenue for some businesses (who started legally selling the dope) and reduced revenue (& thus corporation tax) for all of the other businesses who didn't.