The Fallacy of Sin Taxes
Posted: Friday, March 20, 2009
by Terry Mitchell
http://commenterry.blogs.com
I have to chuckle whenever I hear about someone proposing legislation to create or increase a sin tax. Frankly, I have never understood the concept. Sin taxes seem to be put in place to achieve two competing goals. When one of those goals flourishes, the other necessarily suffers. How much sense does that make?
Cigarette taxes are a prime example of what I'm talking about. Supposedly, they exist to decrease smoking and discourage young people from becoming smokers. However, their purpose is also to collect revenue, often to support government medical programs for the poor, like Medicaid. If more adults quit or reduced their smoking and fewer young people started, there would be a revenue shortfall that would have to be made up somewhere.
Sin tax advocates should be honest enough to state which goal they wish to achieve – a reduction in the "sin" or an increase in revenue. They can't have it both ways.
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Top-level comments on this article: (3 total)Hi Terry, my husband and I talk about this all the time. It seems they are hoping people don't stop "sinning" Good thoughts.Yes, Teresa, it seems that way to me as well. Thanks for commenting.
Ok Terry, you should get a kick out of this coming from me but here goes - just who decides what is sin or not? Now be careful as to how you answer they will tear you up. All the best, Robert.Robert, that's a good question!
Interesting article, and I can see your point to some extent.You don't need both more revenue AND reduction of the sin for such a tax to be successful though, its really win-win - in the case of cigarettes: either smoking is reduced due to the tax (win) or tax revenue is increased due to the tax (win). The other option is not to have the tax, which would be a "lose" (no pressure on smokers to reduce or cut down, and no revenue raised from them at all).Since the options are have the tax or don't have it, potential "loss of revenue" isn't an issue - the tax can only lead to an increase in revenue, although that incease will be smaller as the "sin reduction" increases (in theory down to zero if the sin is wiped out completely).Ben, so I take it take that you favor sin taxes on stuff like cigarette smoking. So why not be consistent and favor a tax on other sins like adultery, pre-marital sex, lying, excessive drinking, excessive gambling, gluttony, lack of exercise, and profanity?"Ben, so I take it take that you favor sin taxes on stuff like cigarette smoking. "
Sort of. I think it's better to tax things like cigarettes and alcohol than not, for pragmatic reasons.
"So why not be consistent and favor a tax on other sins like adultery, pre-marital sex, lying, excessive drinking, excessive gambling, gluttony, lack of exercise, and profanity?"
Firstly, I don't consider all of those sins.
Secondly, none of those (with the possible exception of gambling, which I think is taxed in some places) are products, and so could not possibly be taxed in a manner consistent with cigarette / alcohol tax.
I think perhaps unhealthy fast foods should be taxed to some extent, but this has more potential problems that cigarette / alcohol tax as food is necessary, whereas cigarettes and alcohol are not. Of course, unhealthy fast food is not necessary, but there'd be issues differentiating between foods fairly so it may not be practical to implement such a tax."Firstly, I don't consider all of those sins."Therein lies a problem with sin taxes that I did not previously cover, although Robert pointed it out in his response. Who decides what the sins are? I certainly don't think it should be governments."Sin taxes" doesn't literally refer to taxes for immorality - they are imposed not to improve standards of morality but usually to improve standards of health (so the "sins" are sins against healthy living rather than sins against moral good, or sins against god).
Drinking alcohol is not necessarily immoral for example, but alcohol is often subject to a "sin tax" because excessive consumption or addiction is dangerous.
I think "sin taxes" can also be used more broadly to refer to taxes on any items governments might want to try and reduce consumption of for pragmatic reasons (e.g. petrol / gas, so as to protect the environment).
Governments make countless laws telling us what we can and cannot do. Imposition of sin taxes is far milder than making something illegal, since we can still purchase the item involved. If you consider sin taxes to be government meddling, then laws actually prohibiting substances or even behaviours are meddling on a far greater level.
Should we abandon the rule of law on the grounds that its no business of the government to tell us what we can and cannot do, and each rely on our personal moral judgement or personal interpretation of scriptural morality?As a Christian libertarian (note that I intentionally did not use a capital "L"), I would answer your last question as follows:The government has no right to try to protect us from ourselves. I don't think the Constitution supports the concept of a paternalistic nanny state. Yes, the government must prevent members of the population from victimizing each other. However, in cases when there is not a clear and direct victim or if the only victim is oneself, then the government should stay out of it and leave those things to each individual's conscience and religious beliefs (or lack thereof).With both smoking and drinking, there are usually other victims, admittedly to varying degrees of clarity and directness.
Governments have to spend a lot of money treating diseases related to passive smoking, and have to spend a lot of money on the consequences of excessive alcohol use (not just consequences for the drinker, but those around them like their family, or those injured by their drunk driving etc).
Is it not sensible for governments to try and implement methods, such as "sin taxes", that can either reduce the damage these things can cause to society or if not at least raise some money to put towards repairing it?
What is the point of a government if not to strive to make things better for society?
Do you believe governments should legalize all drugs, and not impose any taxes on their distribution? Or would you say that heroin and crack clearly and directly effect people other than the user while asserting that alcohol and cigarettes do not?"With both smoking and drinking, there are usually other victims, admittedly to varying degrees of clarity and directness."But I don't think they are clear and direct enough to merit the kind of government interference you seem to advocate.
"Governments have to spend a lot of money treating diseases related to passive smoking, and have to spend a lot of money on the consequences of excessive alcohol use (not just consequences for the drinker, but those around them like their family, or those injured by their drunk driving etc)."Why are governments doing this? Where did they get the constitutional mandate or authority for such activity?
"Is it not sensible for governments to try and implement methods, such as "sin taxes", that can either reduce the damage these things can cause to society or if not at least raise some money to put towards repairing it?"Sensible maybe, but where is the constitutional authority for it?
"What is the point of a government if not to strive to make things better for society?"The Constitution lists what the duties of government are. This is not one of them. In fact, the Constitution clearly leaves "striving to made things better for society" to individuals.You've come from "where is the sense in that" in the article to "Sensible maybe, but where is the constitutional authority for it?", so we are drifting off the topic a little.
I won't go into the constitution in great depth, but it seems to me that if it was truly unconstitutional sin taxes could be, and would have been, challenged in the courts?
I think any elected government automatically has the mandate, and the responsiblity, to try and improve things for the people.
The Constitution does say:
"The Congress shall have Power To lay and collect Taxes, Duties, imposts and excises, to pay the Debts and provide for the common Defence and general welfare of the United States", with "welfare" defined as "health, happiness, or prosperity; well-being", and "excises" defined as "a tax on the manufacture, sale, or consumption of goods within a country", so it offers at least some support for "sin taxes" in principle (perhaps it contradicts this in another areas, I'm not sure).I didn't say the government didn't have the right to tax in order to raise revenue. Of course, it has that right. How else can a government raise revenue? Yes, it should tax cigarettes and alcohol, but no differently than it taxes everything else. My problem is with the government using taxation (or any of its other powers) as a tool for behavior modification, when that behavior does not directly and adversely affect someone else. That's why I also oppose mandatory seatbelt and helmet laws.As far as the general welfare clause is concerned, I'll have to admit that it is confusing. It can be interpreted as being anything from staying out of the way and allowing individuals to take care of themselves (as I interpret it) to taking care of the citizenry from cradle to grave (as some radical liberals interpret it). It just think there's more support elsewhere in the document for my interpretation.
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