Sin Tax
From Drug Rehab Wiki
A Sin Tax is a tax added by the government to products or services considered “vices” that are used by only a portion of the citizenry such as alcohol, tobacco or gambling. “Vices” are usually attributed to moral or character weaknesses that are habitual in nature.
A Sin Tax is designed to generate revenue for government budgets and to limit use of certain products and services. Sin Taxes are often more easily accepted by the general public since only those individuals who use the products and services are negatively affected by the tax increases while the public at large benefits from the use of revenue raised by such taxation.
In some communities, Sin Taxes have been attached to such products and services as disposable grocery bags, soda, candy, bottled water, junk food and tanning salons. Proponents of taxing these items have argued that environmental concerns, obesity and skin cancer result from the use of such “vices”.
Similar concerns have motivated this type of taxation historically. In Great Britain in the 18th century, for example, “spirituous liquors” were taxed to dissuade citizens from drinking and to consequently protect citizens who did not drink from the impact of others who did. The use of liquor was considered by many to lead to other health and moral damages such as the erosion of societal values, damage to families, gambling, prostitution and pimping.
In more recent times, Sin Taxes have been used to raise funds to pay for the damages incurred by vices such as alcohol and tobacco use. Healthcare for affected individuals and public management expenses incurred by related events such as accidents caused by the use of alcohol are paid for in part by taxation.
Illegal activities such as prostitution and the sale of illicit drugs have been considered for taxation. Some have proposed that the taxation of illegal activities will combat tax evasion by the individuals engaged in them and significantly raise capital gains for communities.
Excise and Sumptuary Taxes
Sin Taxes can be considered both an excise and a sumptuary tax.
• Excise taxes are taxes levied on the manufacture of products, sale of products or the licensing of businesses involved in the manufacture, sale or provision of certain products or services. Excise taxes are both federal and state taxes established in the United States by those respective governmental entities. Local communities may also establish excise taxation on certain products or services. Federal excise taxes apply uniformly to all states. State and community excise taxes are specific to products and services purchased in those areas and may vary from location to location. Considered an indirect tax, some products are sold with revenue stamps that the manufacturer purchases from the government. These stamps must be displayed on the products sold and can be found, for example, on liquor bottles and the packages of tobacco products.
• Sumptuary taxes are specifically designed to reduce the manufacture, provision and use of goods and services that are marginally acceptable in society at large such as those commonly considered to be vices like gambling or the use of alcohol and tobacco. Many communities have broadened their use of sumptuary taxes to include environmental issues such as vehicular emissions.
