Update (5/21): The New York Daily News reports that “state lawmakers are trying to give the fat tax new life.”
Senate Democrats want to impose a penny excise tax on non-diet sodas to help fund a plan to provide property tax relief to homeowners. “It’s a small amount of money, as far as increasing the price of soda, and it would allow the governor and the state to have a new slogan for soda: ‘Have a coke, a rebate check and a smile,’” said state Sen. Jeff Klein (D-Bronx) who unveiled the plan yesterday.
The idea that taxes have no right to reflect government values is crazy (why else would we give legal and financial bonuses to marriage?). Cigarettes already face steep state taxes precisely because those states value a smoke-free environment. Carbon taxes are advocated on the principle that companies aren’t properly valuing the negative externality of pollution.
Original Post: Writing on The American, published by the American Enterprise Institute, Rev. Robert A. Sirico looks at how the “sin tax” has been creatively revived by those currently “remaking America” in Washington. The sin tax is an excise tax on those goods that elected officials deem morally suspect: tobacco, liquor, junk food, among other things. But Rev. Sirico says that the temptation to impose sin taxes is one that should be resisted for economic and moral reasons. From the article:
The elite media, liberal think tanks, and academic researchers are already building a case against Big Food for its scarlet sins: sweetened drinks, fatty snacks, alcoholic beverages. You know what’s coming next: a wave of punitive government regulation and scores of lawsuits aiming to shake down the nation’s vast food and beverage industry. It’s the same strategy developed for the assault on the tobacco industry—tax the bad stuff out of existence. Today, in New York City, the price of a pack of cigarettes now tops $9 (each pack now carries $5.26 in taxes), which makes the city one of the most expensive places in the country to smoke.
Never mind if you have freely chosen to smoke a cigarette or drink a cold Coke on a hot summer’s day and, mirabile dictu, you take responsibility for your actions. The New Puritans who are ready to dramatically expand the welfare state and limit personal freedoms claim to know what’s best for you.
The sin tax seems like a convenient ploy when the state is searching for new sources of revenue in fiscally tight times. A sin tax also appeals to some voters who view it as a way of discouraging consumption of certain objectionable products. Yet the temptation to impose sin taxes is one that should be resisted for economic and moral reasons. The consequences of the sin tax are often the very opposite of those intended by its designers. Rather than increasing revenue, the sin tax can reduce it. Rather than discouraging what are regarded as morally questionable behaviors, the sin tax can make them more appealing. Rather than reducing what are perceived to be internal costs of the sin, the sin tax can increase them and expand them to society as a whole.
Read “Hate the Sin, Tax the Sinner?” on The American.