Question

Sin Taxes (alcohol/tabacco/marijuana/carbon)

1. Why do we have the tax and it’s purpose?
2. Who is payer of the of the tax ?
3. Is the tax progressive or regressive?
4. Would you want to pay more or less for this tax? Why?
5. What are your personal experience with this tax? Positive or negative?
6. Whatever else you would like to discuss surrounding the topic of taxes in general.

Answer 1

A sin tax is a tax on socially harmful goods. The most commonly taxed goods are alcohol, cigarettes, gambling etc.

• The tax is imposed to discourage consumers from consuming those goods or services which are undesirable or detrimental to the society. The purpose of this tax is to make socially undesirable goods so expensive that the consumers would be forced to give up the habit. Also, to make the producing industry pay a higher tax which can be used to fund other social expenditure.
• The payer of sin tax is the person who consumes such products that are detrimental to the society. The state imposes such tax on every person who is engaged in the consumption of socially harmful goods.
• The tax is regressive. Tobacco and soft drink taxes are more regressive than alcohol taxes as the high income groups spend more money on alcoholic drinks. But generally they remain regressive in most countries.
• The willingness would be to pay less of such taxes as they are regressive in nature. Also, those goods are socially harmful and injurious to the consumers as well.