What do you think about sin taxes?

[Elephant Lee]

Justified deterrent? Is it sleazy for our government(s) to rely on addictions to pay the bills?

Talk about state-run lottos, etc. can also go here.

[Denny Crane]

I'm pro.


Prostitution?  Minor Narcotics?  Alcohol?  Cigarettes?


Decriminalize, and then tax the hell out of them.

[Denny Crane]

I'm pro.


Prostitution?  Minor Narcotics?  Alcohol?  Cigarettes?


Decriminalize, and then tax the hell out of them.

Why should prostitution be heavily taxed? It's not harming anyone. You could at least make a vague case for drugs and alcohol, because they make people less healthy and that costs the public healthcare system money, but why should prostitution be more heavily taxed than other types of businesses?

Don't see why not.

Sex, booze, drugs.  All considered vices.  Why not tax them?

[Captain]

Evil. The government isn't deterring anything. They're putting a tax on something that they know they can get away with because they're selling it as a "sin" tax...

Their sales pitch, "By Taxing Cigarettes, we'll help people to stop smoking and we'll all be healthier!"
Translation: "We need more money to spend on interstate highways in Hawaii, so we'll tax cigarettes because we know that Americans loooove the tobacco..."

[Denny Crane]

See you guys are presuming something.

You guys think that I want to tax those things as a deterrent.  I want them taxed for the completely opposite reason.

I want them taxed precisely because demand for those things is inelastic.  The government might as well make money off of it seeing as how no matter how much they tax it, people will still indulge in those things.  It's a great way to increase government revenue will possibly lowering taxes in other, elastic goods and services (jobs, food, energy, etc).

[Denny Crane]

See you guys are presuming something.

You guys think that I want to tax those things as a deterrent.  I want them taxed for the completely opposite reason.

I want them taxed precisely because demand for those things is inelastic.  The government might as well make money off of it seeing as how no matter how much they tax it, people will still indulge in those things.  It's a great way to increase government revenue will possibly lowering taxes in other, elastic goods and services (jobs, food, energy, etc).

Well, if that's your definition of vice, I suppose. But I don't agree with that, either.

I'm not trying to define vice specifically.  I'm just grouping those things together since they're commonly collectively referred to as vices.  There's no real use for them in society (and no real harm for the most part).  They're purely indulgent, so why not tax them?

There are other things you could throw into that mix (luxury items, video games, etc), but demand for those things can be very elastic, so imposing taxes could be harmful to the overall economy.  Imposing taxes on purely indulgent goods/services where demand is almost perfectly inelastic makes sense.  Keeping those things criminalized and thus untaxable doesn't.

[Captain]

Evil. The government isn't deterring anything. They're putting a tax on something that they know they can get away with because they're selling it as a "sin" tax...

Tobacco puts a burden on the health systems.

Taxing tobacco to pay for public health perhaps forces tobacco users to pay the real cost of the product.

Free market for the win?

No, because the tobacco use primarily causes health problems for the smoker themselves. Since the smoker will inevitably be responsible for their own healthcare in a free-market system, the tax placed on their smoking does not actually go towards tobacco-related health issues and therefore fails to accomplish your end.

Alcohol is a significant factor in traffic accidents and deaths.

Taxing alcohol to pay for either 1) anti-drunk driving campaigns or 2) drunk driving enforcement perhaps forces alcohol users to pay the real cost of the product.

Free market for the win?

OR, we can discuss this in drivers ed classes and put it on the written test, as we already do, leading drivers to be well aware of the laws in this area. We can then just allow the police who are ALREADY on the roads patrolling to pull over drunk drivers and arrest them. This is not a free market you describe, it is a penal system.

Also, the penalty is being placed on ALL drinkers, not just the ones who act irresponsibly. The vast majority of drinkers do not drive while intoxicated. Some drinkers don't even drive. These drinkers are paying for the cost of someone else's mistakes. Free market? Hardly. Besides, the fines associated with a DUI arrest are designed to "pay the real cost of the product."


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Not to mention that none of the sin taxes actually pay for what they were intended for. And they never will, because politicians tend to be irresponsible while attempting to appease the public and keep their jobs.

[Captain]

I also think the alcohol one is a little tenuous. People usually do have to pay for the consequences of drunk driving, right?

True!

Convert it to a public health issue again (recent study showed people who drink 2 or more drinks per day have increased chance of stomach cancer!)

First drink tax free, rest taxed?

 

If you drink until you have cancer, you either have insurance to pay for it, or you will probably die. Dead people aren't a drag on public funds. In communist America, people may not be responsible for their own actions, but we don't live in communist America.

[Gengiswump]

The dangerous aspects of prostitution largely stem from it being illegal

<3 <3 <3

[philibusters]

I think its a good idea. I can sin taxes serving multi purposes

1.  Raising Revenues
2.  Deterring selected behaviors/Social policy
3.  Redirecting money

1.  For raising revenues, I guess you would compare it to the alternatives to see if it makes policy sense.  It is a consumption tax compared to the usually income and property taxes that we are used to paying.  As a consumption tax, it does not rely on the principle that it taxes those most able to pay proportionately to their ability to pay like the income tax rests on, but is a regressive tax that targets certain users of products.  Is that good or bad?  Instinctively I say bad, taxing should tax the rich the most and the poor the least, here everybody pays the same tax regardless of income.  However, another function the government is to deter behavior that is associated with externalities and is inefficient, which leads into

2.  Deterring selected behaviors.  Smoking not only cause lung cancer, where the government has to pick up a large piece of the tab, but also second hand smoke costs non-smokers and their insurance company lots of money (another externalities).  Whereas the the government cannot give money to people who develop cancer cause of second hand smoke they  can make the users of the product that cause externalities pay for as much as the externalities as administratively possible.  Same goes for alcohol and drugs.  Alcoholism often leads to homelessness, inefficiency at the work place, breaking up of families, drunk driving accidents.  Like cigs, alcohol is addictive and thus criminal penalties will only have a limited effect, the best way to deal with this behavior is to deter it before it starts or make the users pay for as much of the externalities as administratively possible.  Criminal laws don't compensate families of drunk driving victims nor children affected by their parents divorce due to alcohol, sin taxes can at least somewhat help allievate the externalities by deterring the activity in the first place and paying for some of the costs associated with the externalities. 

3.  A consumption taxes taxes consumption of certain activities leading to money being spent elsewhere.  Such money might be invested or might be consumed in other activities, but if money is more productive being invested or being put into another activity then its good economic policy to redirect the money.

One last point, 2 and 3 were used in justifying one, but sometimes consumption taxes are needed because they are the only feasible way of raising revenue even if in a perfect world, income taxes could be raised to make up what the consumption tax brings in.  You might have a scenario where have through policy analysis you rank three alternatives in this order 1.  Raise income tax .5%, 2. Sin tax, 3.  More debt.  In that scenario even though points 2 and 3 would be validly in assessing the options of the incrase income taxes and the alternative sin tax, if an increase in income tax is not politically feasible, then you can disregard my second and third points and still advocate the imposition of a consumption tax.