
Do “sin taxes” work? - hvo
https://www.economist.com/the-economist-explains/2018/08/10/do-sin-taxes-work
======
yason
From the article: _Sin taxes are blunt policy instruments. People who only
have the occasional drink are not taking on any great health risks, yet they
are taxed no differently than serious alcoholics._

But surely the alcoholics are taxed way more than people who have an
occasional drink because of the sheer volume? If you drink or smoke a lot, the
taxes do accumulate into significant amounts annually.

 _Policymakers should still consider implementing sin taxes if they intend to
intervene to change individuals’ behaviour. But they should be aware that the
bulk of the damage that smokers, drinkers and the obese do is to themselves,
and not to others._

It might be blunt in the economic sense if the taxed behaviour doesn't exhibit
clear external costs but in a social context the scheme works great. Using
taxation to discourage behaviour is a better way to collect taxes than taxing
everyone.

Taxing goods or behaviour that is deemed harmful both brings in the money and
also makes a statement. Further, if alcohol taxes bring in 1% of the state
budget it means everyone's income is that much lower because of taxing
alcohol.

"Sin taxes" are also economically unpredictable because when the collected
amounts begin to drop the tax is working as intended. But socially this is
exactly why they were used in the first place.

~~~
dsr_
_But they should be aware that the bulk of the damage that smokers, drinkers
and the obese do is to themselves, and not to others_

Unless you have a functional health care system, in which case increased costs
are passed on to everyone's taxes. It would be appropriate to dedicate
revenues from tobacco and alcohol taxes to medical care.

Sin taxes are taxes that fall only on the users of the products or services in
question, and rarely have knock-on effects like fuel taxes (which then raise
the cost of transporting everything else, but promote more efficient
transportation).

Adding recycling deposits, for example, vastly increases the rate of
recycling, reduces litter, provides a minor source of income for the homeless,
and provides a very small tax revenue.

~~~
whatyoucantsay
Smokers cost the health care system less because they die younger:
[https://bmjopen.bmj.com/content/2/6/e001678](https://bmjopen.bmj.com/content/2/6/e001678)

~~~
manicdee
They cost more money per year to keep alive while they're dying, and they
contribute less to the economy (because they die early). The indirect costs of
their mortality are far greater than the direct savings.

~~~
refurb
Why would they cost more per year when dying? Lung cancer can be pretty swift
versus other diseases like Alzheimer’s.

~~~
IMTDb
Speaking from europe where healthcare is basically free.

Medical care for these patients is extremely expensive. Each surgery costs
around 50 to 60 thousand euro and it's not uncommon to get 2 or 3 of those
before dying. Add to that the frequent visits to the doctor's office, the
oxygen tanks if needed, the medications, etc. The other option would be to
just "let them die" but that's not what we decided to do as a society.

The trend is that we are now able to keep them alive slightly longer, ( at a
higher cost) and that they start developing symptoms slightly later thus
reducing the potential "benefit" for society.

~~~
refurb
Alzheimer’s can mean providing 24/7 care for a decade.

Not sure it’s cheaper than lung cancer.

------
dahart
“smokers tend to die earlier, meaning that they probably save governments
money since they draw less from state pensions.”

Wow, that’s some furious hand-waving assumption if I’ve ever seen any. Smokers
die of cancer, which costs a boatload, and smoking removes people prematurely
from the workforce.

Took less than two seconds to find well studied contrary evidence:

[https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4502793/](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4502793/)

[https://web.stanford.edu/group/sjph/cgi-bin/sjphsite/the-
eco...](https://web.stanford.edu/group/sjph/cgi-bin/sjphsite/the-economic-
burden-of-smoking/)

It appears that the idea that early death is a net economic positive is
actually smoking industry propaganda:
[https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1120774/](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1120774/)

~~~
jessriedel
> “smokers tend to die earlier, meaning that they probably save governments
> money since they draw less from state pensions.”

OK, let's call the above sentence "the claim". Looking at the nine "Main
Results" of your first link, the authors do not directly address the claim,
they just choose to focus on something different (all emphasis mine):

> We conclude that the direct costs and externalities to society of smoking
> far outweigh any benefits that might be accruable _at least when considered
> from the perspective of socially desirable outcomes_ (ie, in terms of a
> healthy population and a productive workforce)...

> Apart from the income benefits of tobacco smoking, another source of
> benefit, especially to the government, of smoking is the _substantial cost
> savings in pension payments from premature death of smokers_. This is a
> highly debated issue in the literature, because it is premised on the
> thinking that a shorter life expectancy implies a reduced expenditure on
> pensions. Thus, _attempts to promote this will be deemed socially
> undesirable and hence cannot be incorporated into social policy design_.

Note that they don't give a figure for the total savings on pensions, which
suggests to me that they know it's very large. They only number they give is

> Manning et al. have estimated that every pack of cigarettes smoked reduces
> the life expectancy by 137 minutes and pension costs by $1.82.

If we go to Manning et al, we find

> Although nonsmokers subsidize smokers' medical care and group life
> insurance, smokers subsidize nonsmokers' pensions and nursing home payments.
> On balance, _smokers probably pay their way at the current level of excise
> taxes on cigarettes_...In contrast, drinkers do not pay their way...

[https://www.ncbi.nlm.nih.gov/pubmed/2918654](https://www.ncbi.nlm.nih.gov/pubmed/2918654)

Your second link does not address the claim. And your last link doesn't
attempt to rebut the industry-funded results they discuss.

I have no idea what the right way to think about this topic is, but you've
hardly given a definitive answer.

------
GarrisonPrime
Of course, as far as governments are concerned whether such taxes reduce
"sinful" activities is irrelevant, so long as they increase tax revenue and
allow politicians a way to improve their public images.

~~~
rm_-rf_slash
Before the federal income tax was instituted, the alcohol tax was the U.S.
government’s single largest source of tax revenue.

The imposition of a federal income tax was the single most necessary goal for
prohibitionists to push for the constitutional amendment for alcohol
prohibition.

It’s also worth mentioning that during the time that the federal alcohol tax
was active (created under the Lincoln Administration to help pay for the Civil
War), Americans drank twice per capita the amount we drink today, so it didn’t
even dissuade drinking all that much.

Americans were ferociously drunk in the 19th and early 20th century. Some
historians argue that prohibition ended the era of the largely men-only
saloons, and when women and men drank together in speakeasies, men tended to
drink less, thus reducing overall alcohol consumption in the post-prohibition
era.

~~~
ckarmann
Not saying you are totally wrong but the federal income tax has been already
existing for decades at this time and the max and min rates actually went down
during the prohibition era (per wikipedia). It only went up in 1932 a year
before its repeal following the start of the Great depression. If it was a
goal of the prohibitionists to hike up that tax it was largely unsuccessful.

------
esturk
I feel the article was really complaining about the tax being inefficient than
ineffective. The article answers with: yes, they are effective but inefficient
because it's a blunt policy that impacts everyone including people that
occasionally travel and drink alcohol.

Often, economic policies don't take into consideration the complexity in a
patchwork approach in implementation. Yes, it's more efficient result wise,
but it carries over a lot of overhead. An across the board implementation is
easier to carry out.

~~~
jopsen
And the claim of low efficiency also seemed to lack some numbers. While an
alcohol tax certain hits the occasional drinker, it hits the alcoholic far
harder because the alcoholic buys and consumers far more alcohol.

That's said, probably still an inefficient and blunt instrument. And yeah, it
carries a lot of overhead.

------
pbadenski
_But they should be aware that the bulk of the damage that smokers, drinkers
and the obese do is to themselves, and not to others._

Erm... really?

"Alcohol 'more harmful than heroin' says Prof David Nutt"
[[https://www.bbc.co.uk/news/uk-11660210](https://www.bbc.co.uk/news/uk-11660210)]
based on his research available here:
[http://www.ias.org.uk/uploads/pdf/News%20stories/dnutt-
lance...](http://www.ias.org.uk/uploads/pdf/News%20stories/dnutt-
lancet-011110.pdf)

------
exabrial
My problem with sin taxes is they're usually sponsored by a corporate entity.
Eg: in Seattle the sugar tax doesn't apply to Starbucks hilariously.

~~~
craftyguy
> Seattle the sugar tax doesn't apply to Starbucks hilariously.

Wow, to exclude an organization which sells 1000+ cal. drinks (vast
majority/all from sugars) to millions of people a day, is hilarious indeed.
And sad.

~~~
bskap
It's milk-based drinks that are excluded, not Starbucks specifically. So it
doesn't apply to things like chocolate milk, milkshakes, or milkshakes with a
small amount of coffee in them.

~~~
exabrial
What's so better about a drink with milk with tons of sugar than a drink
without milk with tons of sugar? The drink without milk probably has fewer
calories.

This is just an example of a corporation buying out a local government.

~~~
Ntrails
> This is just an example of a corporation buying out a local government.

I gotta question whether it's realistic to say that Starbucks bought out local
government with it's infinite resources but McDonalds couldn't afford to?

I'd love to see the actual/official reasoning behind the exclusion though

~~~
craftyguy
Starbucks was born/raised in Seattle.. so maybe that affiliation won them a
free pass?

------
oliwarner
It's bizarre reading comments on this from people in countries where these
taxes do little or nothing to rectify the issue that's being taxed in the
first place.

The UK is far from perfect but at least revenue raised from smoking is
invested into both preventative care (ie cessation programmes) and actual
treatment.

Arguments that the tax should be even higher, or substances banned, obviously
come from people who have no understanding of how black markets work. Vast
networks of tobacco smuggling already exist. You have to pick a balance.

------
stevenicr
What has always bothered me about "sin taxes" is that it's been a way to
divide and conquer the populace.

Most of the people in my city and state I've called home for a couple decades
have been vocal about and voted consistently to not enact new taxes and higher
taxes, even when people say "its for the children" (eg we need money for
schools, need to raise property taxes)

However politicians can cut that group being vocal into pieces by coming out
with alternatives like liqour taxes.

We recently enacted a new stripper tax, adding to the door fees of
establishments that provide "adult entertainment".

People can debate if it's trying to reduce consumption for public health and
all that, they say the money it going towards trafficking victims. I had never
known there was a shortage of money there.

I don't think there is a shortage of money there, in fact our state has had a
surplus of money for some time. But it makes for a nice boogey man to drum up
emotions and try to make someone look like a golden knight fighting for what's
right.

Sadly, the extra few bucks you take from someone at the door of these places
is just reducing the discretionary spending of the patrons and therefor most
likely just taking money away from the strippers (those extra few dollars
would of likely ended up as tips on the stage).

Of course who is going to stand up and be vocal about not extra taxing
strippers, or those self medicating with nicotine or alcohol? NOt enough of a
crowd, they are easily divided and conquered.

It's often the minority that bears the burden of things like this from what I
have seen, and not enough of the majority thinks about it.

Let the tourists suffer the outrageous hotel tax, let the gamblers pay for the
colleges, the drinkers pay for whatever.

Divide and conquer. It's minority bashing usually.

------
WalterBright
Pollution should be taxed as well.

~~~
eeZah7Ux
Taxing pollution would be very easy to implement by taxing oil and coal
extraction and would help realign ecology and economy but it's not going to
happen in the current political climate.

~~~
WalterBright
The way to make it palatable is to couple it with equivalent tax cuts, to make
it revenue neutral.

------
nerdb0t
>Some policymakers argue that people who engage in unhealthy habits also
impose negative externalities, since they tend to present taxpayers with
bigger medical bills. _In practice, however, these costs tend to be
overstated._

citation needed.

------
smittywerben
"Sin taxes" misses most of the problem of the availability in the first place.

In lax states I end up paying half (i.e. $25 for a $50 bottle).

That substantial difference is not taxes alone. I'd guess 15% is due to
blocking private stores from entering the market.

So I would rather pay higher taxes if my total cost for liquor goes down, if
that makes any sense.

------
csomar
I'm okay with "sin" taxes if the taxes goes directly to fixing the problem.
Like the additional taxes for Tobacco goes to finance former smokers diseases;
or that of sugar to fight obesity.

It's like "Here you pay medication/trouble while you consume".

------
theriddlr
In the UK, to avoid the sugar levy, soft drinks manufacturers have added
sweeteners to their recipes to reduce the sugar content. Lose-lose for all of
us – wouldn't mind paying more for sugary drinks but instead we get the
yuckier sweetener versions.

------
known
Sounds like
[https://en.wikipedia.org/wiki/Pay_as_you_throw](https://en.wikipedia.org/wiki/Pay_as_you_throw)

------
JeanMarcS
The article states that Tobacco have to be treated differently because it’s
addictive, why sugar is different ? It’s addictive too.

~~~
grkvlt
No, sugar is not physically addictive, unlike nicotine. There is a clear
difference. Now, sure, people with certain mental or psychological issues can
become addicted to sugar, but the same could be said about pretty much
anything, its not the sugar that is the problem.

~~~
JeanMarcS
I was thinking about a study I read 2 or 3 years ago about rodent, sugar and
cocaine.

But it seems that it’s controversial.

My mistake.

[https://www.theguardian.com/society/2017/aug/25/is-sugar-
rea...](https://www.theguardian.com/society/2017/aug/25/is-sugar-really-as-
addictive-as-cocaine-scientists-row-over-effect-on-body-and-brain)

------
wemdyjreichert
I prefer sin taxes to income taxes. I'd rather be taxed for vice (gambling,
prostitution, smoking, what-have-you (not that I do any of those things)) then
virtue (getting up and working hard to earn a living and be a positive, value-
added member of society).

------
mbrumlow
Hey! How did they get a photo of my belly?

------
Karishma1234
Clearly it works really well for politicians.

------
tener
TLDR: yes, they do (to some extent).

~~~
microcolonel
Particularly if they're not so high as to effect a "ban", the effect is a ban
on people less affluent than some mark making "sinful" purchases in a
particular jurisdiction. Sin taxes are particularly regressive, since they
tend to be higher than typical sales taxes (which are already regressive in
some sense).

~~~
YokoZar
If policy makers are concerned about potential regressive effects, they could
take the revenue earned and apply it towards helping the poor. One "easy"
method is lowering the bottom tax bracket - in the US they could cut the
explicitly regressive payroll tax.

~~~
votepaunchy
Social security (the large majority of the payroll tax) is highly progressive
when paid out and then taxed.

~~~
YokoZar
This isn't a critique of social security payouts -- other than political
expediency, there is no particular need to couple the payments with the
current payroll tax source.

------
dsfyu404ed
CTRL+F "regressive"

0 Results

 _closes tab in disgust_

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kulix425
sure they do, if you are ok with the government making decisions about you and
your life FOR you.

~~~
nrb
"The government" is people. Are you arguing that society, collectively, should
not establish a system of rules that reflects their social norms?

~~~
onetimemanytime
It may take quite a bit for people's decision to trickle up to the
government...if it ever reaches there. They vote on 12000 things a year (made
up the number, OK) and very few issues are so important to warrant not voting
them /rising up.

------
debacle
Modern sin taxes tend to be about maximizing tax revenue and not reducing
harmful acts. When sin taxes are enacted, they tend to be relatively
reasonable. I've heard as high as 20% for marijuana legislation, however I can
promise you that 20-30 years after legalization, that tax will have crept
slowly, higher and higher.

