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Do “sin taxes” work?
- known 8y agoSounds like https://en.wikipedia.org/wiki/Pay_as_you_throw https://en.wikipedia.org/wiki/Pay_as_you_throw
- yason 8y agoFrom the article: Sin taxes are blunt policy instruments. People who only have the occasional drink are not taking on any great health risks, yet they are taxed no differently than serious alcoholics. But surely the alcoholics are taxed way more than people who have an occasional drink because of the sheer volume? If you drink or smoke a lot, the taxes do accumulate into significant amounts annually. Policymakers should still consider implementing sin taxes if they intend to intervene to change individuals’ behaviour. But they should be aware that the bulk of the damage that smokers, drinkers and the obese do is to themselves, and not to others. It might be blunt in the economic sense if the taxed behaviour doesn't exhibit clear external costs but in a social context the scheme works great. Using taxation to discourage behaviour is a better way to collect taxes than taxing everyone. Taxing goods or behaviour that is deemed harmful both brings in the money and also makes a statement. Further, if alcohol taxes bring in 1% of the state budget it means everyone's income is that much lower because of taxing alcohol. "Sin taxes" are also economically unpredictable because when the collected amounts begin to drop the tax is working as intended. But socially this is exactly why they were used in the first place.
- robertAngst 8y agoBut this doesnt answer 'does it work'? Less drunk driving + less bad decisions? The cost of alcohol makes it so when I drink, I drink.
- joejerryronnie 8y agoIf current social trends continue, working in Tech is going to be considered a sin. Get ready to pay extra taxes for your choice to work in such an abhorrent industry.
- dsr_ 8y agoBut they should be aware that the bulk of the damage that smokers, drinkers and the obese do is to themselves, and not to others Unless you have a functional health care system, in which case increased costs are passed on to everyone's taxes. It would be appropriate to dedicate revenues from tobacco and alcohol taxes to medical care. Sin taxes are taxes that fall only on the users of the products or services in question, and rarely have knock-on effects like fuel taxes (which then raise the cost of transporting everything else, but promote more efficient transportation). Adding recycling deposits, for example, vastly increases the rate of recycling, reduces litter, provides a minor source of income for the homeless, and provides a very small tax revenue.
- whatyoucantsay 8y agoSmokers cost the health care system less because they die younger: https://bmjopen.bmj.com/content/2/6/e001678 https://bmjopen.bmj.com/content/2/6/e001678
- rosser 8y agoBut, per that same study, "society" would net — inclusive, among other things, of pension funds not disbursed — lose ~€70k per individual, while saving less than €5k on medical expenses. Is that really a good bargain?
- manicdee 8y agoThey cost more money per year to keep alive while they're dying, and they contribute less to the economy (because they die early). The indirect costs of their mortality are far greater than the direct savings.
- flukus 8y ago> and they contribute less to the economy (because they die early) The typically don't start to die in significant numbers until they're getting up to retirement age, they're an economic burden by that point.
- mirimir 8y agoYes, they certainly work as taxes. > Further, if alcohol taxes bring in 1% of the state budget it means everyone's income is that much lower because of taxing alcohol. Maybe you mean "that much higher" there? Also, just FYI, in 1923 "[s]ome 30 percent to 40 percent of the government’s income came from the tax on alcohol."[0] So Prohibition was funded by the federal income tax. But now we have both :( 0) https://taxfoundation.org/how-taxes-enabled-alcohol-prohibition-and-also-led-its-repeal/ https://taxfoundation.org/how-taxes-enabled-alcohol-prohibit...
- yason 8y agoIndeed, thanks for spotting the thinko. Everyone's income is that much higher (or everyone's taxes are that much lower which I think what I was thinking when writing the sentence).
- stuaxo 8y agoSmokers damage others through secondary smoke. People that work in pubs and clubs after a smoking ban must see a big benefit. Everyone old enough to have gone out in the UK in the early 2000s can tell you that pubs and clubs were totally full of smoke and you would come home smelling like an ashtray. Bit of a weak argument the article makes.
- coldtea 8y ago>Smokers damage others through secondary smoke. Do they really, or is that an old wives tale from non-reproducible research, the way the anti-fat scare was? "The largest and longest study (Enstrom & Kabat) followed more than 35,000 subjects for almost 40 years and found no significant risk associated with second-hand smoke. Similarly, the World Health Organization spent seven years at a dozen research centers in seven countries and came to the same conclusion".
- nherment 8y agoBoth the CDC[1] and the WHO[2] disagree with what you just wrote. > Since the 1964 Surgeon General’s Report, 2.5 million adults who were nonsmokers died because they breathed secondhand smoke [1] > While the tobacco industry continues to claim that the evidence that passive smoking causes disease – particularly lung cancer – is controversial, every independent authoritative scientific body that has examined the evidence has concluded that passive smoking causes many diseases. [2] Also, the Enstrom & Kabat study is widely criticised [3] + [4]: > incorrect definition of passive smoking exposure as a “nonsmokerʼs marriage to a smoker” [3] > A severe error in the study was the failure to establish a control group of nonsmokers who were unexposed to secondhand smoke. [4] [1] https://www.cdc.gov/tobacco/data_statistics/fact_sheets/secondhand_smoke/health_effects/index.htm https://www.cdc.gov/tobacco/data_statistics/fact_sheets/seco... [2] http://www.who.int/tobacco/research/secondhand_smoke/about/en/ http://www.who.int/tobacco/research/secondhand_smoke/about/e... [3] https://www.researchgate.net/publication/236833718_Critique_of_Enstrom_Kabat%27s_Epi_Study_BMJ_2006_2003 https://www.researchgate.net/publication/236833718_Critique_... [4] [PPT] www.econ.wayne.edu/agoodman/7550/week14/Second-hand_Smoke.ppt
- tener 8y agoTLDR: yes, they do (to some extent).
- microcolonel 8y agoParticularly if they're not so high as to effect a "ban", the effect is a ban on people less affluent than some mark making "sinful" purchases in a particular jurisdiction. Sin taxes are particularly regressive, since they tend to be higher than typical sales taxes (which are already regressive in some sense).
- YokoZar 8y agoIf policy makers are concerned about potential regressive effects, they could take the revenue earned and apply it towards helping the poor. One "easy" method is lowering the bottom tax bracket - in the US they could cut the explicitly regressive payroll tax.
- votepaunchy 8y agoSocial security (the large majority of the payroll tax) is highly progressive when paid out and then taxed.
- YokoZar 8y agoThis isn't a critique of social security payouts -- other than political expediency, there is no particular need to couple the payments with the current payroll tax source.
- microcolonel 8y agoThe end result is still a policy which oppresses the people who can not afford the tax more severely than it oppresses those who can. If the desired effect is a reduction in smoking, for example, the appropriate approach is to track and limit sales on a per-person basis. This, of course, is less attractive to the state, and more cumbersome to administer and specify, but it doesn't suffer from the obvious moral wrong: artificially pricing people out of perceived vice on the basis of class.
- kulix425 8y agosure they do, if you are ok with the government making decisions about you and your life FOR you.
- unchurch 8y agoOkay, Ayn Rand, that’s enough.
- stcredzero 8y agoWhat if there was solid data decisively showing that there were substantial externalities effectively being paid for by the public? The answer to that, is that the power to determine this is too dangerous. There do have to be rules and conventions, or there would be chaos. Since such power is dangerous, the exercise of it should be kept to a minimum. Then the question arises as to what that minimum is.
- lend000 8y agoThat's a different story. Externalities should be taxed to the extent of the cost of the externality to society (if not outright banned, which is not practical for most common externalities like running a combustion engine, breathing, etc.). But pure sin taxes like soda/gambling/recreational drug taxes, where an individual is only affecting themselves, are effectively the government and busybody supporters of the policy playing god of morality. I've actually heard people suggest that drinking soda or using pot is an indirect externality as a result of the potential to 'change' users, and that its indirect effect on society via people's free association with such things is a justifiable externality. That implies that society is entitled to aspects of a person actions and characteristics outside of their lawfulness. It's a very socialist and anti-individualist argument, which I disagree with on a fundamental level. Now for cigarettes, on the other hand, there are two potential externalities to tax. 1. The smoke that affects anyone near the user. 2. The addictive factor (nicotines), which is an externality against its users created by (and the tax should be applied to) the manufacturer. Not to mention all the environmental externalities that should be applied at each stage of the supply and manufacturing chain due to fuel/processing/chemical effects on the environment/energy used/etc. However, these are common to all externalities, and if I had my way I would tax externalities in a direct and systematic way like this across the board, such that the tax is sufficient for the government to "undo" the externality. If there is no feasible way to undo it, it should be illegal.
- GarrisonPrime 8y agoOf course, as far as governments are concerned whether such taxes reduce "sinful" activities is irrelevant, so long as they increase tax revenue and allow politicians a way to improve their public images.
- stcredzero 8y agoAs with the justice system, "who can win" is used as a proxy for "justice."
- rm_-rf_slash 8y agoBefore the federal income tax was instituted, the alcohol tax was the U.S. government’s single largest source of tax revenue. The imposition of a federal income tax was the single most necessary goal for prohibitionists to push for the constitutional amendment for alcohol prohibition. It’s also worth mentioning that during the time that the federal alcohol tax was active (created under the Lincoln Administration to help pay for the Civil War), Americans drank twice per capita the amount we drink today, so it didn’t even dissuade drinking all that much. Americans were ferociously drunk in the 19th and early 20th century. Some historians argue that prohibition ended the era of the largely men-only saloons, and when women and men drank together in speakeasies, men tended to drink less, thus reducing overall alcohol consumption in the post-prohibition era.
- ckarmann 8y agoNot saying you are totally wrong but the federal income tax has been already existing for decades at this time and the max and min rates actually went down during the prohibition era (per wikipedia). It only went up in 1932 a year before its repeal following the start of the Great depression. If it was a goal of the prohibitionists to hike up that tax it was largely unsuccessful.
- jopsen 8y agoWell, for those of us who attempts participate in democracy, by writing/calling politicians, supporting NGOs, voting and so forth, YES, it actually matters whether it works. I'm sure it's not a solution for all problems. As the article says it's a blunt tool. But given that they do work, I'll keep encouraging my politicians to not let our alcohol and tobacco taxes slip below that of neighboring countries. Given that we're already paying the overhead, we might as well get some effect by cranking up the taxes :) hehe (well, maybe there's other downsides, but it's thought worth considering)
- esturk 8y agoI feel the article was really complaining about the tax being inefficient than ineffective. The article answers with: yes, they are effective but inefficient because it's a blunt policy that impacts everyone including people that occasionally travel and drink alcohol. Often, economic policies don't take into consideration the complexity in a patchwork approach in implementation. Yes, it's more efficient result wise, but it carries over a lot of overhead. An across the board implementation is easier to carry out.
- jopsen 8y agoAnd the claim of low efficiency also seemed to lack some numbers. While an alcohol tax certain hits the occasional drinker, it hits the alcoholic far harder because the alcoholic buys and consumers far more alcohol. That's said, probably still an inefficient and blunt instrument. And yeah, it carries a lot of overhead.
- Karishma1234 8y agoClearly it works really well for politicians.
- davidf18 8y agoThe MPOWER WHO (World Health Organization) plan to help with tobacco cessation is comprised of 1. raising taxes, 2. banning smoking in public places, 3. scary anti-smoking ads of about $1 to $2 per capita per year and 4. doctors speaking to their patients about quitting, 5. patients using nicotine replacement therapies and 6. telephone counseling support. This combination has been shown to be highly effective. Over 1/2 the contribution of getting people to quit or to never start comes from raising tobacco taxes. Other studies show that by taxing sugar-sweetened beverages (SSBs) such as Coke by about 2 cents per oz. (in the US) shifts demand to healthier drinks such as water since most of these who consume SSBs are of limited financial means. So, in fact when used in concert with overall formulas, the "sin taxes" are in fact effective.
- debacle 8y agoModern sin taxes tend to be about maximizing tax revenue and not reducing harmful acts. When sin taxes are enacted, they tend to be relatively reasonable. I've heard as high as 20% for marijuana legislation, however I can promise you that 20-30 years after legalization, that tax will have crept slowly, higher and higher.
- deleted 8y ago[deleted]
- JeanMarcS 8y agoThe article states that Tobacco have to be treated differently because it’s addictive, why sugar is different ? It’s addictive too.
- grkvlt 8y agoNo, sugar is not physically addictive, unlike nicotine. There is a clear difference. Now, sure, people with certain mental or psychological issues can become addicted to sugar, but the same could be said about pretty much anything, its not the sugar that is the problem.
- JeanMarcS 8y agoI was thinking about a study I read 2 or 3 years ago about rodent, sugar and cocaine. But it seems that it’s controversial. My mistake. https://www.theguardian.com/society/2017/aug/25/is-sugar-really-as-addictive-as-cocaine-scientists-row-over-effect-on-body-and-brain https://www.theguardian.com/society/2017/aug/25/is-sugar-rea...
- mbrumlow 8y agoHey! How did they get a photo of my belly?
- WalterBright 8y agoPollution should be taxed as well.
- eeZah7Ux 8y agoTaxing pollution would be very easy to implement by taxing oil and coal extraction and would help realign ecology and economy but it's not going to happen in the current political climate.
- WalterBright 8y agoThe way to make it palatable is to couple it with equivalent tax cuts, to make it revenue neutral.
- exabrial 8y agoMy problem with sin taxes is they're usually sponsored by a corporate entity. Eg: in Seattle the sugar tax doesn't apply to Starbucks hilariously.
- anfilt 8y agoHey got to have the Frappuccino with cream on top. /s
- craftyguy 8y ago> Seattle the sugar tax doesn't apply to Starbucks hilariously. Wow, to exclude an organization which sells 1000+ cal. drinks (vast majority/all from sugars) to millions of people a day, is hilarious indeed. And sad.
- bskap 8y agoIt's milk-based drinks that are excluded, not Starbucks specifically. So it doesn't apply to things like chocolate milk, milkshakes, or milkshakes with a small amount of coffee in them.
- exabrial 8y agoWhat's so better about a drink with milk with tons of sugar than a drink without milk with tons of sugar? The drink without milk probably has fewer calories. This is just an example of a corporation buying out a local government.
- Ntrails 8y ago> This is just an example of a corporation buying out a local government. I gotta question whether it's realistic to say that Starbucks bought out local government with it's infinite resources but McDonalds couldn't afford to? I'd love to see the actual/official reasoning behind the exclusion though
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- dsfyu404ed 8y agoCTRL+F "regressive" 0 Results closes tab in disgust
- dahart 8y ago“smokers tend to die earlier, meaning that they probably save governments money since they draw less from state pensions.” Wow, that’s some furious hand-waving assumption if I’ve ever seen any. Smokers die of cancer, which costs a boatload, and smoking removes people prematurely from the workforce. Took less than two seconds to find well studied contrary evidence: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4502793/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4502793/ https://web.stanford.edu/group/sjph/cgi-bin/sjphsite/the-economic-burden-of-smoking/ https://web.stanford.edu/group/sjph/cgi-bin/sjphsite/the-eco... It appears that the idea that early death is a net economic positive is actually smoking industry propaganda: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1120774/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1120774/
- jessriedel 8y ago> “smokers tend to die earlier, meaning that they probably save governments money since they draw less from state pensions.” OK, let's call the above sentence "the claim". Looking at the nine "Main Results" of your first link, the authors do not directly address the claim, they just choose to focus on something different (all emphasis mine): > We conclude that the direct costs and externalities to society of smoking far outweigh any benefits that might be accruable at least when considered from the perspective of socially desirable outcomes (ie, in terms of a healthy population and a productive workforce)... > Apart from the income benefits of tobacco smoking, another source of benefit, especially to the government, of smoking is the substantial cost savings in pension payments from premature death of smokers. This is a highly debated issue in the literature, because it is premised on the thinking that a shorter life expectancy implies a reduced expenditure on pensions. Thus, attempts to promote this will be deemed socially undesirable and hence cannot be incorporated into social policy design. Note that they don't give a figure for the total savings on pensions, which suggests to me that they know it's very large. They only number they give is > Manning et al. have estimated that every pack of cigarettes smoked reduces the life expectancy by 137 minutes and pension costs by $1.82. If we go to Manning et al, we find > Although nonsmokers subsidize smokers' medical care and group life insurance, smokers subsidize nonsmokers' pensions and nursing home payments. On balance, smokers probably pay their way at the current level of excise taxes on cigarettes...In contrast, drinkers do not pay their way... https://www.ncbi.nlm.nih.gov/pubmed/2918654 https://www.ncbi.nlm.nih.gov/pubmed/2918654 Your second link does not address the claim. And your last link doesn't attempt to rebut the industry-funded results they discuss. I have no idea what the right way to think about this topic is, but you've hardly given a definitive answer.
- nerdb0t 8y ago>Some policymakers argue that people who engage in unhealthy habits also impose negative externalities, since they tend to present taxpayers with bigger medical bills. In practice, however, these costs tend to be overstated. citation needed.
- smittywerben 8y ago"Sin taxes" misses most of the problem of the availability in the first place. In lax states I end up paying half (i.e. $25 for a $50 bottle). That substantial difference is not taxes alone. I'd guess 15% is due to blocking private stores from entering the market. So I would rather pay higher taxes if my total cost for liquor goes down, if that makes any sense.
- theriddlr 8y agoIn the UK, to avoid the sugar levy, soft drinks manufacturers have added sweeteners to their recipes to reduce the sugar content. Lose-lose for all of us – wouldn't mind paying more for sugary drinks but instead we get the yuckier sweetener versions.
- pbadenski 8y agoBut they should be aware that the bulk of the damage that smokers, drinkers and the obese do is to themselves, and not to others. Erm... really? "Alcohol 'more harmful than heroin' says Prof David Nutt" [https://www.bbc.co.uk/news/uk-11660210 https://www.bbc.co.uk/news/uk-11660210] based on his research available here: http://www.ias.org.uk/uploads/pdf/News%20stories/dnutt-lancet-011110.pdf http://www.ias.org.uk/uploads/pdf/News%20stories/dnutt-lance...
- oliwarner 8y agoIt's bizarre reading comments on this from people in countries where these taxes do little or nothing to rectify the issue that's being taxed in the first place. The UK is far from perfect but at least revenue raised from smoking is invested into both preventative care (ie cessation programmes) and actual treatment. Arguments that the tax should be even higher, or substances banned, obviously come from people who have no understanding of how black markets work. Vast networks of tobacco smuggling already exist. You have to pick a balance.
- csomar 8y agoI'm okay with "sin" taxes if the taxes goes directly to fixing the problem. Like the additional taxes for Tobacco goes to finance former smokers diseases; or that of sugar to fight obesity. It's like "Here you pay medication/trouble while you consume".
- stevenicr 8y agoWhat has always bothered me about "sin taxes" is that it's been a way to divide and conquer the populace. Most of the people in my city and state I've called home for a couple decades have been vocal about and voted consistently to not enact new taxes and higher taxes, even when people say "its for the children" (eg we need money for schools, need to raise property taxes) However politicians can cut that group being vocal into pieces by coming out with alternatives like liqour taxes. We recently enacted a new stripper tax, adding to the door fees of establishments that provide "adult entertainment". People can debate if it's trying to reduce consumption for public health and all that, they say the money it going towards trafficking victims. I had never known there was a shortage of money there. I don't think there is a shortage of money there, in fact our state has had a surplus of money for some time. But it makes for a nice boogey man to drum up emotions and try to make someone look like a golden knight fighting for what's right. Sadly, the extra few bucks you take from someone at the door of these places is just reducing the discretionary spending of the patrons and therefor most likely just taking money away from the strippers (those extra few dollars would of likely ended up as tips on the stage). Of course who is going to stand up and be vocal about not extra taxing strippers, or those self medicating with nicotine or alcohol? NOt enough of a crowd, they are easily divided and conquered. It's often the minority that bears the burden of things like this from what I have seen, and not enough of the majority thinks about it. Let the tourists suffer the outrageous hotel tax, let the gamblers pay for the colleges, the drinkers pay for whatever. Divide and conquer. It's minority bashing usually.
- wemdyjreichert 8y agoI prefer sin taxes to income taxes. I'd rather be taxed for vice (gambling, prostitution, smoking, what-have-you (not that I do any of those things)) then virtue (getting up and working hard to earn a living and be a positive, value-added member of society).