Pros and Cons of Sin Tax Sin tax is a tax that is applied to a product that has been deemed undesirable in the general society. An example is a tax that is applied to beer or cigarettes. These tax can be placed to raise money for a certain public amenity like a stadium, when raising other taxes, like income, would politically be a bad move. This kind of tax is appealing to voters who wish to get rid of the undesirable actions.
What are some of the pros of imposing a sin tax?
Well the first obvious answer is it increases revenue for the government. But is it really fair to tax certain actions and to others? Who gets to decided what actions are the ones to be taxed and what actions should not? And should the producers of these “morally unpleasant” products be taxed as well? It seems unfair that these producers do not get a cut from these taxes.
Does the sin tax hurt the sale of such products? It seems unethical to punish the producer. Does a sin tax encourage illegal selling of the products?
In the sass’s most of the cigarettes being brought into Canada in underground markets were actually manufactured in Canada, exported to the United States, and brought back into the amount. The same wholesalers have been known to buy back the cigarettes and sell them again. This hurts the producers who are legally selling the products. In short, the sin tax decreases revenue for the government, lowering the profit of the producers which leads to less salary wages for workers, this will in turn decrease profit for the economy.
This is the very purpose for the sin tax in the first place. Now let’s consider some of the pros for the sin tax. One is that if applied to pollution, it can have great benefits for the environment now and for the future. Imposing a elution tax would be a lot easier to regulate then the illegal smuggling of cigarettes and alcohol. The benefits of this kind of regulation would affect everyone as opposed to the small percentage of a cigarette tax. Of course this too may reduce the wages of factory workers but the environment is one thing that we can’t afford to mess up.
We only have one O-zone layer and we want to ensure the safety for our future generations. In Texas this pollution tax has been used in an attempt to raise money for public schools. The original plan was to tax cigarettes and strip clubs, but the Governor of Texas came up with the idea to tax pollution. This idea was well received by the community. Funding educational projects with sin taxes seems like a good way to spend the money, but the effects are higher gasoline prices for the rest of us.
I think it will always be a give/take relationship and no one will ever be completely satisfied. Approximately 16 states tax alcohol and only 1/3 put the money aside for education, the same is the cigarettes with 17 states taxing but only 1/3 of the money is going towards education. In recent years even less of that money is going to the schools and it instead going towards health care.
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The Effects of Sin Tax Law to the Bar Owners. (2017, Sep 17). Retrieved from https://graduateway.com/the-effects-of-sin-tax-law-to-the-bar-owners/