Posts tagged with: sin tax

Blog author: jcarter
posted by on Monday, March 11, 2013

ammoNeed to justify a new sin tax or raise an existing one? Adam J. Hoffer,William F. Shughart II, and Michael D. Thomas recently explained in U.S. News and World Report how it’s done:

Claim that consuming some good or engaging in some activity contributes to ill health or harms the environment. Argue that “experts” know what choices consumers should make better than the consumers themselves know. Finally, don’t forget to select items for taxation that only a minority of the population buys, but that you and the majority of voters do not. Be a paternalist.

That seems to be the steps lawmakers are taking in recent proposals to add firearms and ammunition to the list of  items worthy of a “sin tax.”
(more…)

Blog author: sstanley
posted by on Friday, February 8, 2013

As occurrences of preventable diseases increase and the debt deepens, some look to “sin taxes” as an easy to solution to both problems. Thirty-three states have even gone as far as to implement a soda tax in an attempt to curb obesity. At first glance sin taxes seem to be a good idea, but they can actually cause more harm than good.

The Mercatus Center at George Mason University has just published a working paper on sin taxes and their negative effects. The study was conducted by Adam J. Hoffer, William F. Shughart II, and Michael D. Thomas.  They have found that taxing specific goods or services based on perceived “negative externalities their consumption generates”  is an ineffective source of revenue.

The authors summarize their findings in a recent U.S. News and World Report op-ed:

  • Lobbying: Millions of dollars have been spent to thwart taxation of the soft drink industry’s products and to prevent existing taxes from being raised. In 2009 alone, the industry spent more than $57 million on lobbying. Such lobbying expenditures are socially wasteful. How much money is now being spent attempting to block Mayor Bloomberg’s ban on 32-ounce soft drink containers?
  • Regressive taxation: Far from being income-neutral, such taxes are regressive because their burden falls most heavily on people with the fewest options—the poor. Low-income households who continue to purchase goods that are sin-taxed will have even less money left over to spend on other items.
  • Revenue not used for its intended purpose: Sin taxes raise revenue by transferring money from those who continue to buy the taxed items straight to the coffers of the public treasury. Taxing sin might be reasonable if the revenue from these taxes was used to address the underlying negative consequences of consumption. In the real world, however, money generated by the tobacco settlement financed general spending and not smoking cessation programs or treating smoking-related diseases. The social security trust fund has been replaced with treasury IOUs, and the highway trust fund filled by taxing the sin of driving will fail to meet obligations as early as 2015.

You can read the entire working paper, “Sin Taxes: Size, Growth, and the Creation of the Sindustry” here. Acton president and co-founder, Rev. Robert Sirico has also written about the consequences of sin taxes. You can read his “Hate the Sin, Tax the Sinner?” here.

Blog author: jcouretas
posted by on Friday, March 19, 2010

From “56% Oppose ‘Sin Taxes’ on Junk Food and Soft Drinks” on Rasmussen Reports:

Several cities and states, faced with big budget problems, are considering so-called “sin taxes” on things like junk food and soft drinks. But just 33% of Americans think these sin taxes are a good idea.

A new Rasmussen Reports national telephone survey shows that 56% oppose sin taxes on sodas and junk food. Twelve percent (12%) are undecided.

Many of the politicians who are pushing these taxes insist that they are intended to fight obesity, especially among children, and to address other public health issues. However, voters are highly skeptical of their motivation.

Only 17% believe the state and national politicians who favor sin taxes are more interested in public health than in finding another source of revenue for the government. Seventy-three percent (73%) say sin tax supporters are more interested in raising additional money for the government.

After all, 86% of adults say it is not the government’s responsibility to determine what people eat and drink. Five percent (5%) believe the government does have that responsibility.

Also see these Acton Institute resources:

“The Sin Tax Craze: Who’s Next?” by Rev. Robert A. Sirico

“Tax man aims to take a bigger bite out of junk food junkies” by Matt Cavedon

“Lifestyle Taxes — Political Camouflage for New Federal Sin Taxes” by Rev. Robert A. Sirico

“The Sin Tax: Economic and Moral Considerations” Occasional Paper by Rev. Robert A. Sirico

“The Economics of Sin Taxes” by James Sadowsky S.J. in Religion & Liberty.

In his commentary, Matt Cavedon, communications associate at the Acton Institute, addressed new taxes that are being proposed to combat the high obesity rates in the United States and to provide financial support for health care reform.  The new taxes proposed to help fund health care reform will begin to tax what Congress deems junk food or unhealthy food.  Cavedon exposes the hypocrisy fostered by taxes on such junk or unhealthy food:

In “The Sin Tax: Economic and Moral Considerations,” the Rev. Robert A. Sirico, president of the Acton Institute, has argued against the idea of taxing sins to pay for public services. If the government relies on taxes on unhealthy foods to pay for health care programs, how can it both fight obesity and maintain steady revenue? Sirico says it cannot: “Under a sin tax, the state finds itself professing to discourage certain behaviors while relying on their continuance as a source of revenue.” The government may say unhealthy eating is bad, but it would rely on it for tax money.

The problem of hypocrisy leaves aside the question of whether government is qualified to be the moral police officer of our pantries in the first place. Sirico points out that “the government’s sense of morality, especially when it is influenced by excessive power, is often at war with traditional standards and common sense.” With food taxes, eating apple pie would become more of a punishable sin in the eyes of the government than cheating on a spouse.

Cavedon further explains the hypocrisy of taxes on junk and unhealthy food while also articulating the moral disorientation of such taxes.  “Obesity is a problem” Cavedon states, “but higher taxes are not the answer.”

Recently the Acton Institute pulled back the political camouflage of the Lifestyle Tax, a new tax under consideration by the Senate Finance Committee, and exposed it as an extension of the Sin Tax.  The Senate Finance Committee is considering levying the Lifestyle Tax to raise funds for President Obama’s health care plan.

Reverend Robert A. Sirico, president and co-founder of the Acton Institute, wrote an article on the Sin Tax and the proposal of expanding it to tax soft drinks.  You can read Rev. Sirico’s column in The American.

Click here to read the press release issued by the Acton Institute concerning the propsed Lifestyle Taxes.

Blog author: jcouretas
posted by on Thursday, May 21, 2009

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.

On the Atlantic Magazine blog, Derek Thompson links Rev. Sirico’s article and offers praise for sin taxes:

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.

sin taxOriginal 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.

Blog author: jcouretas
posted by on Monday, August 11, 2008

Writing in the London-based Times, Chris Ayres in “Welcome to Nannyfornia” looks at the “frenzy of puritanical edicts from California’s politicians” that cover a host of sins, ranging from transfats to the highly objectionable use of the terms “Mom” and “Dad.”

Ayres raises a “disturbing” question:

Is Nannyfornia providing us with a glimpse of what Obama’s America might look like? After all, Obama is a classic banner. He recently proposed banning all toys from China. He banned his own staff from wearing green clothing during his recent trip to the Middle East (green is the colour of the Hamas flag). He banned the New Yorker magazine from his press plane after it depicted him as a terrorist in a political cartoon. He wants to ban “excessive” profits by raising capital gains tax. Why? Because he thinks it’s fair. No matter that the state’s revenues from the tax have always gone up whenever the rate has been lowered.

Jot Condie, president of the California Restaurant Association, is one of many Americans who fears all this prohibition is going too far. “The Government here in California is banning a food product simply because it’s not healthy,” he complains. “What do you ban next? Bacon fat? The possibilities are limitless.”

Read “The Sin Tax: Economic and Moral Considerations” by the Rev. Robert A. Sirico on the Acton Web site. Quote:

It is a mistake to entrust the modern state with the enforcement of certain moral codes of behavior that extend beyond obvious crimes against person and property. When government is allowed to go beyond these limits and enforce a wider array of moral issues, it will substitute its own form of morality for traditional morality. A government program like recycling, for example, could be deemed more morally worthy than traditional virtues like fidelity in marriage. Obeying securities regulations could be seen as the very heart of virtue, whereas teaching children at home seen as a vice. The government’s sense of morality, especially when it is influenced by excessive power, is often at war with traditional standards and common sense.

Also see “Cigarette Tax Burnout” in today’s Wall Street Journal.

Democrats are planning one more pre-election go at a $35 billion children’s health program expansion (S-chip) funded by a 61-cent per pack tobacco tax increase. They justify the new levy as a “sin tax.” OK, but if Americans don’t start sinning a whole lot more, states and Uncle Sam are going to go broke.

Blog author: jballor
posted by on Tuesday, July 3, 2007

The National Center for Policy Analysis (NCPA) has published a paper titled, “Taxing the Poor: A Report on Tobacco, Alcohol, Gambling, and Other Taxes and Fees That Disproportionately Burden Lower-Income Families” (PDF).

The paper highlights state lotteries as particularly regressive taxes: “The dollar amount spent on the lottery by the lowest-income individuals (earning less than $10,000 annually) is twice as much as the highest earners (earning more than $100,000 annually).” I wrote a piece reacting to a poll with a similar finding awhile back.

The NCPA study also points out that “lotteries have worse odds than other forms of gambling; in fact, states retain some 33 cents of each dollar of lottery revenue — whereas privately owned casinos keep just 4.4 percent of the take.” And of course that casino take depends on the type of game played. Keno has the worst odds, with roughly 1/4 of the take going to the house, while games like roulette, slots, or blackjack have less than 5% house takes.

The paper also studies other popular sin taxes, like tobacco and alcohol, and one of the newest potential additions to the sin tax category: gasoline.