Throughout history, various sin taxes have been implemented with the intent to control the purchase of socially undesirable products such as alcohol and cigarettes. These taxes rarely reduce the purchase of such products because their use is of a personal nature for most consumers. Socially undesirable activities such as gambling and prostitution are often subject to taxation under this category.
Often these taxes are promoted as a means to funding special projects, but often this revenue is diverted to cover other government expenditures. The government benefits from the revenue received from the taxes collected by the sale of items or activities that fall under the sin tax umbrella. Levying or raising existing sin taxes has been used at times to reduce budget deficits versus implementing additional or increasing existing taxes on all citizens.
Sin taxes are often seen as unfair to lower income consumers while the wealthy are rarely burdened by these extra fees. This form of taxation is often seen as a form of discrimination being they are the people that are most affected with more of their income going toward paying the taxes because the taxes do not normally reduce the amount of product sold. If you are unsure of what a sin tax is, speak tosomeone with a tax llm.
Throughout history, alcohol has always been subject to some form of regulation from the government. From prohibition to sin taxes added to the sale of alcoholic beverages, the demand for this product has not waned. This demand has at times caused increased illegal activity surrounding the production and sale of alcohol.
With all the studies done that have determined how bad cigarettes are for smokers and those that are exposed to cigarette smoke, it would seem only fair to tax this product to deter smokers and fund anti-smoking programs. The thing is as cigarettes become subject to additional taxes, smokers will often switch to stronger varieties in order to better satisfy their craving, instead of buying more.
Soda and Junk Foods
As the rate of obesity has reached epidemic proportions, there has been a push to tax sugary drinks, such as soda and junk food. Almost two thirds of the states in the United States have implemented taxes on soda. These particular taxes; however, have upset many consumers, who view it as policymakers overstepping their grounds and forcing their ideology on what they eat or drink.
Gambling and Prostitution
The taxation of gambling is intended to dissuade people from this activity without taking the drastic step of entirely making it illegal. In most places, prostitution is illegal, but in Nevada, it is highly regulated by the state. Being not all people gamble or hire prostitutes, when additional revenue is needed by the governing body, it is easy to do so by raising the tax for this group.
Many of the products taxed can be associated to immoral or sinful behavior; therefore, it is easy for legislators to promote additional sin taxes on products or services because of emotions swirling around their use. The arguments for taxes on alcohol and cigarettes are deemed justifiable in light of the medical problems that can be caused by its excessive consumption, and the presumptive burden that these expenses place on society. However, it must be noted that sin taxes most often will not discourage consumption or use of the products or activities that are taxed.