Sin Taxes Are One of the More Controversial Taxes Out There

Category: Obesity, Tax
Last Updated: 13 Oct 2022
Essay type: Controversial
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Sin taxes are one of the more controversial taxes out there. They are basically a form of indirect taxation (which has its pros and cons) on goods and services which society considers to be moral ills. As a general rule, it is unwise for the government to interfere in people's lives more than is necessary to enforce the rights of others. Libertarians rightly ask why we should punish people for making decisions about their own lives — even if the majority says we should, that doesn't make it right. Sin taxes, though they rarely have conventional economics cited as a defence of them, actually do have sound economic backing however.

In fact, a libertarian should support sin taxes, because they correct an infringement of individual rights. Common examples of sin taxes are taxes on cigarettes and alcohol. Choosing to consume these goods is an individual decision; should the government be involved and actively attempt to reduce their consumption? The answer is yes, because of the external costs not accounted for in the price of these goods. Without taxes, the price of a pack of cigarettes would not account for second-hand smoke and the impact of cigarette smoking on the health and enjoyment of others.

Likewise, the price of alcohol does not include the costs of things like drunk driving and other general impairment of one's faculties which can pose a menace to society. It is the individual who is harmed by a drunkard who cannot react quickly enough to avoid an accident. A logical conclusion might be to even extend the sin tax to other things. Libertarians in a number of countries have been campaigning for the legalisation of drugs because they believe that the choice to use drugs is an individual one which the government has no right to interfere in.

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I personally am not inclined to take a strong stand on this issue, but if I were to side with the libertarians (which is my natural inclination), I would nevertheless also support a steep sin tax on drugs. Cocaine and marijuana have similar effects on society as cigarettes and drugs (some research indicates that marijuana smoke may be more dangerous than cigarette smoke). It only makes sense to tax their consumption to internalise their external costs. There is a time and place for everything under the sun, and that includes government intrusion on individual decisions.

When your decision has an impact on others, the price of that decision must account for the potential costs and benefits it will bring about. health officials grappling with the obesity epidemic have debated a wide range of approaches to helping slim the American waistline. To some degree, everything from building more sidewalks to banning chocolate milk has been explored. Yet few tactics have been as polarizing as the possibility of introducing tariffs on treats.

Despite endorsement from several respected obesity researchers and politicians, soda taxes, for example, have been subject to severe scrutiny, as critics protested that implementing a tax before verifying that it would achieve the end result was shortsighted and potentially overreaching. So, in attempt to determine just how sin taxes might impact people's food choices, psychologists from the University of Buffalo decided to put junk food levies to the test—in the lab. Researchers recruited shoppers to peruse the aisles of a mock supermarket filled with 68 common foods labeled with nutritional information.

Participants were given a predetermined amount of cash, and were told to use that money to purchase a week's worth of groceries for a family. The first time, all of the products on the shelves were priced in keeping with local supermarkets. In subsequent trips, however, junk food was taxed—an additional 12. 5%, then 25%— or healthier foods were subsidized to reduce cost. The study, published in the journal Psychological Science revealed that taxes were more effective at getting people to avoid certain products than subsidies were at prompting healthier food purchases.

In scenarios where junk foods were taxed, study participants generally came away with a lower caloric total for their groceries, and a higher ratio of protein to fats and carbohydrates. Yet, in situations where healthy foods were subsidized, the savings were often spent on additional junk food. That is, instead of stocking up on more fruits and vegetables because they were cheaper, the study's shoppers bought their veggies, and then used the leftover cash to bring home extra treats like chips and soda.

In the end, the subsidies-only scenarios resulted in higher total calorie counts, and didn't result in overall nutritional improvement on the week's groceries. Because the scenario is hypothetical, the findings certainly shouldn't be taken as the final word in the sin tax debate, the researchers stress, but should instead be used to inform the ongoing discussion about practical ways to battle obesity. To that end, they say, the next step should be research to determine whether these results would be replicated in the real world. Read more: http://healthland. ime. com/2010/02/25/would-junk-food-taxes-really-make-people-eat-better/#ixzz1Bv8WDv91 I’m not a fan of paying higher taxes. Nor am I a fan of people going without health insurance. As we’ve heard over and over on the 6 o’clock news and political debates, our current health care system cannot continue along its present course and represents a serious threat to the health of the U. S. economy. Therefore, I’m reluctant to admit that substantial changes will be required (both monetary and personal responsibility) if we plan on altering our future.

Unfortunately, we are living in an era where we are so concerned about offending someone that we’re willing to turn a blind eye to the obvious, and withhold what must be said until we’re among the safety net of our supporters or behind the security of a computer screen. The Case For Higher Taxes to Pay Health Care Costs At present, the likelihood that higher taxes will become a necessary evil to pay for government sponsored health care is gaining ground. Personally, it really doesn’t bother me all that much.

If called upon in the future, I’m willing to pay a slightly higher tax rate so uninsured Americans can have access to life saving drugs or little Danny falls off his bike and breaks his arm. No problem, happy do it, just play me a patriotic song and tell me I’m doing my part for the good ol’ Red, White ; Blue. Heck, I’ll might even enjoy it. As long as the people getting it actually deserve it! Then comes a news report which says the Obesity Epidemic in America is still going strong. Obesity in America – NBC News. Obesity in America – Diabetes Related Illnesses a Threat to Medicare.

Should Junk Food Have a Sin Tax / Fat Tax? When we, as a nation, are discussing future budget crises partly because we can’t push ourselves away from the table… I think we might need to reassess the problem. Most of the things that are considered “bad for you” in the U. S. come with a regulatory agency warning label, and possibly a sin tax. Goods like cigarettes, alcohol, and even gasoline, have an additional sin tax attached to them because they’re (arguably) bad for us in their own unique ways. Not to mention, they’re a cash cow for the tax man. So why should junk food be any different?

It’s well known that sugar stuffed goodies or chocolate covered yumyums are contributing to the obesity epidemic. Why should food that possesses little nutritional value but contributes to the cancer/diabetes/heart disease epidemic be immune from taxation? Better yet, why should the people who consume these foods (if you can call them that) eat significantly more of them compared to the population mean, have a body mass index greater than 30%, and still get access to the same government sponsored health care that everyone else is supposed to get when they retire?

Moreover, be eligible for disability insurance solely because of their weight and medical conditions directly related to their eating habits. Why should junk food mega-consumers be allowed to contribute as much in taxes as much as the next person, but indulge in a lifestyle that will undoubtedly cause them to take more out of the Medicare system than they actually contributed during their working years. Critics will (correctly) say that these individuals will die off sooner than normal resulting in lower overall health care costs.

However, considering that medicine is constantly extending the human lifep and the cost of medical care/drugs will always increase, it’s an arguable debate at best. This situation hardly seems fair to the majority of the population, and because of that, it’s a viable question and should be pushed to the forefront. In a fair and just society (which we’re supposed to live in), those who spend more in the end should be expected to pay more upfront. Right? A National Sin Tax of 2% for Junk Food? What if, just for arguments sake, a 2% fat tax was placed on anything bearing the label “junk food”?

When an item would be purchased at the grocery store, a mandatory 2% sin tax was added to the item just like everyday sales tax. It will be used to fund Medicare deficits, educating the general public against an unhealthy diet, as well as providing temporary financial assistance to anyone who can’t afford medical care. After all, this sin tax will target the majority of people who are, or likely will be, posing a greater risk to the sustainability of government sponsored health care (e. g. Medicare). Then again, is a 2% sin tax enough?

How about a 5%? An extra quarter for a bag of Doritos or Snicker’s bar doesn’t seem that bad. Does it? It is a powderkeg of a debate just waiting to go off, but because of political correctness, no one wants to bring it up. Considering our present situation (severe recession, financial crisis, record numbers of uninsured, etc), it’s a debate worth having regardless of the hurt feelings and political fallout. Then again, perhaps complaining about our problems while doing nothing to solve them is just the new way American way.

A so-called "sin tax" is a tax which is specifically levied against products or services that a society has identified as harmful or undesirable, but not so harmful or undesirable that they can or should be banned outright (i. e. prohibition). Common sin taxes include those on alcohol and tobacco, although those regulations which exist in places that have legalized but restricted gambling or prostitution can also be referred to as sin taxes. The purpose of a sin tax is based in economic theory: it intends to reduce consumption of the undesirable good by increasing the price.

Sin taxes are currently levied against a wide variety of social ills which are considered not so serious that they need to be prohibited. Prostitution (in many countries), cocaine, and marijuana are criminalized in most countries, for instance, but alcohol and tobacco are not. In American history, the Prohibition era demonstrated that alcohol could be eliminated from society only at extremely high cost, and in large part alcohol was not eliminated, but simply driven underground onto the black market. Sin taxes are seen as a way of reducing the frequency of socially harmful behaviour without creating an underground criminal economy.

This is the approach taken when charging taxes on alcohol, cigarettes, in some countries marijuana and other supposedly mild drugs, and in some current proposals on soft drinks and other sugar-rich junk foods for public health reasons. In economic theory, a sin tax is also known as a sumptuary tax or a Pigovian tax - a tax which attempts to reduce the collective social harm from a private economic transaction by raising the price of that transaction. The law of supply and demand indicates that when a price for a good or service goes up, more producers will be willing to supply it, but fewer purchasers will be willing to buy it.

At the same time, when the price for a good does down, more purchasers will buy it, but fewer producers will be willing to make it in the first place. A tax does both: the end price of the good ends up artificially high so that few people buy it, but the actual money which goes to the seller (i. e. price minus tax) is held artificially low, so that fewer producers enter the market. Normally economists consider this a generally negative impact of taxation, but in the case of sin taxes, it is seen as a positive - since the purpose of the sin tax is to reduce or even eliminate the harmful behaviour, rather than to encourage economicgrowth.

In theory, a sin tax raises the price of the undesirable good without increasing the profits to the producer. With the price having risen, fewer people will be willing to buy the good. Overall, this results in a general reduction in consumption compared to what it would have been on the free market. Particularly in countries with advanced social welfare networks, the argument is also often made that sin taxes help society directly by producing a pool of funds to pay for the consequences of undesirable activity.

For example, tobacco cigarettes cause lung cancer - which, in almost all advanced countries except the United States, is treated with public funds. Sin taxes on cigarettes create a pool of money out of which lung cancer treatments can be funded, so that non-smokers are not covering the costs of lung cancer through their income taxes. At the same time, in practice jurisdictions which have sin taxes must balance the benefits of a higher sin tax (in terms of reducing the harmful behaviour) with the risk of creating black markets.

Black markets, or underground economies, commonly supply illegal goods in all countries, including illegal drugs. Black markets can only do so at increased cost, to cover risks,pay border smugglers and organized criminal organizations, cover losses to law enforcement, and so on. However, if the added cost of the black market is less than the added cost of the sin tax, then sin taxes may lead to a large underground economy. In some regions of Canada, for example, cigarette smuggling is a profitable activity due to high taxes on cigarettes.

Black market cigarettes are produced on Aboriginal reserves or smuggled across the border from the United States. In addition to this practical problem of managing sin taxes (which must paradoxically be high enough to be effective but low enough to prevent black markets from emerging), there is also an opposition argument from libertarians who argue that the government should not be interfering with individual citizens' freedom to choose how to spend their money when their choices fundamentally involve harm to themselves rather than harm to others.

Of course, this rests on the assumption that the principal social "evils" of alcohol and tobacco consumption are liver cirrhosis and lung cancer suffered by drinkers and smokers themselves, rather than the smaller number of bystanders struck by drunk drivers or stricken with cancer from second-hand smoke. Taxing snacks: The pros and the cons Diet-to-Go Meal Delivery: $25 Off 1st Week’s Order with Coupon “calorielab25?

A proposal by Massachusetts Governor Deval Patrick to levy a 5 percent surcharge tax on sugar-laden snacks and beverages, pitched by his office as “a critical first step in discouraging the consumption of these empty calories,” has raised again some basic questions about the wisdom and practicality of imposing “sin taxes” to reduce the public’s usage of certain commodities. A quick review of some of them, with attempts at answers. Isn’t this just another revenue-raising scheme disguised as a health issue?

True to some extent; even the Massachusetts public health commissioner admitted that the primary goal of the tax is to provide money to state coffers. But that money, which is expected to run more than $40 million a year, will be used to fund public health services, some of which will probably involve weight-reduction programs. Will it actually motivate people to consume fewer sodas and candy bars and the like? Ordinarily, the answer would be “not much,” and not enough to significantly lower the state’s obesity numbers.

There are already 33 states that charge sales taxes on soft drinks or candy, mostly around 4 to 6 percent, and studies of the sales charts indicate that those amounts are too small to put a meaningful dent in public consumption. To really accomplish that, take a leaf from the imposition of cigarette taxes, which did in fact cut into tobacco sales because of their sheer size of the taxes, which often amounted to $2 or more per pack. A Harvard experiment found that, given a big enough tax on sugary sodas — in that case, 35 percent — sales thereof tanked by fully 20 percent, even as sales of non-taxed diet sodas rose.

So why not make it a 35 percent tax? Because no legislature would ever go for something that draconian. First, it’s hard to sell the premise that Cokes and Hershey bars are cigarette-level health hazards and legitimate targets for hypertaxing. Second, it’s hard to sell any tax increases whatsoever during a Recession of a Lifetime; 5 percent is as much as Governor Patrick thought he could get away with. But the economic downturn may change the basic math, here. For the same financial reasons that a large tax is out of the question, a small tax may actually gain some clout.

Sure, another 5 percent won’t change people’s behavior under normal economic conditions, but at a time when people have begun raising their own vegetables and cutting their kids’ hair to save a few bucks, an extra nickel per soda or Snickers bar might get a lot of people rethinking that impulse purchase. It might also mean that any tax at all would be politically unacceptable right now. Then we might give some thought to the Australian Variation, where they’re calling for the tax on low-alcohol beer to be abolished, as an incentive for the notoriously thirsty Aussies to cut their overall alcohol intake.

An American adaptation of that might have those states that currently tax food products eliminate the tax for low-fat, low-cal, low-sugar dietary soft drinks, candy, snack foods and so forth. Write or e-mail your legislator. (Ironically, the proposed Massachusetts law would tax both regular and diet items equally. Tsk tsk. Back to the drawing board, Governor. ) Senate leaders are considering new federal taxes on soda and other sugary drinks to help pay for an overhaul of the nation's health-care system.

The taxes would pay for only a fraction of the cost to expand health-insurance coverage to all Americans and would face strong opposition from the beverage industry. They also could spark a backlash from consumers who would have to pay several cents more for a soft drink. On Tuesday, the Senate Finance Committee is set to hear proposals from about a dozen experts about how to pay for the comprehensive health-care overhaul that President Barack Obama wants to enact this year. Early estimates put the cost of the plan at around $1. 2 trillion. The administration has so far only earmarked funds for about half of that amount.

The Center for Science in the Public Interest, a Washington-based watchdog group that pressures food companies to make healthier products, plans to propose a federal excise tax on soda, certain fruit drinks, energy drinks, sports drinks and ready-to-drink teas. It would not include most diet beverages. Excise taxes are levied on goods and manufacturers typically pass them on to consumers. Senior staff members for some Democratic senators at the center of the effort to craft health-care legislation are weighing the idea behind closed doors, Senate aides said.

The Congressional Budget Office, which is providing lawmakers with cost estimates for each potential change in the health overhaul, included the option in a broad report on health-system financing in December. The office estimated that adding a tax of three cents per 12-ounce serving to these types of sweetened drinks would generate $24 billion over the next four years. So far, lawmakers have not indicated how big a tax they are considering. Proponents of the tax cite research showing that consuming sugar-sweetened drinks can lead to obesity, diabetes and other ailments.

They say the tax would lower consumption, reduce health problems and save medical costs. At least a dozen states already have some type of taxes on sugary beverages, said Michael Jacobson, executive director of the Center for Science in the Public Interest. "Soda is clearly one of the most harmful products in the food supply, and it's something government should discourage the consumption of," Mr. Jacobson said. The main beverage lobby that represents Coca-Cola Co. , PepsiCo Inc. , Kraft Foods Inc. and other companies said such a tax would unfairly hit lower-income Americans and wouldn't deter consumption. Taxes are not going to teach our children how to have a healthy lifestyle," said Susan Neely, president of the American Beverage Association. Instead, the association says it's backing programs that limit sugary beverage consumption in schools. Some recent state proposals along the same lines have met stiff opposition. New York Gov. David Paterson recently agreed to drop a proposal for an 18% tax on sugary drinks after facing an outcry from the beverage industry and New Yorkers. The beverage-tax proposal would apply to drinks that many Americans don't onsider unhealthy -- such as PepsiCo's Gatorade and Kraft's Capri Sun -- based on their calorie content. Health advocates are floating other so-called sin tax proposals and food regulations as part of the government's health-care overhaul. Mr. Jacobson also plans to propose Tuesday that the government sharply raise taxes on alcohol, move to largely eliminate artificial trans fat from food and move to reduce the sodium content in packaged and restaurant food. The beverage tax is just one of hundreds of ideas that lawmakers are weighing to finance the health-care plans. They're expected to narrow the list in coming weeks.

The White House, meanwhile, is pulling together private health groups to identify cost savings that will help fund the health overhaul. Mr. Obama on Monday held a White House meeting with groups that represent doctors, hospitals, insurers, pharmaceutical companies and medical-device makers. They pledged to help restrain cost increases in the health-care system in an effort to save $2 trillion over the next decade. "When it comes to health-care spending, we are on an unsustainable course that threatens the financial stability of families, businesses and government itself," Mr. Obama told reporters. Write to Janet Adamy at janet. adamy@wsj. om BUFFALO, N. Y. , Feb. 25 (UPI) -- Taxing unhealthy foods reduces overall calories purchased, while cutting the proportion of fat and carbohydrates and increasing protein, U. S. researchers say. The study, published in Psychological Science, finds subsidizing the prices of healthy food increased overall calories purchased without changing the nutritional value. Leonard Epstein of the University of Buffalo said some states are beginning to impose "sin taxes" on fat and sugar to dissuade people from eating junk food, while others favor subsidies over punitive taxes as a way to encourage people to eat fruits, vegetables and whole grains.

The thought is that if you make it cheaper, people will eat more of it, more expensive and people will eat less, Epstein says. Epstein and colleagues simulated a grocery store "stocked" with images of everything from bananas to nachos and had a group of volunteer mothers given laboratory "money" to shop for a week's groceries for the family. Each food item was priced the same as groceries at a real grocery nearby, and each food came with basic nutritional information. First the mothers shopped using regular prices. Then the researchers raised the prices of unhealthy foods by 12. percent, and then by 25 percent, or they discounted the price of healthy foods comparably. The study showed taxes were more effective in reducing calories purchased over subsides, the researchers said. Read more: http://www. upi. com/Health_News/2010/02/25/Study-Food-sin-taxes-effective/UPI-60061267154775/#ixzz1BvAQlOhN A recent study examining the potential impact of sin taxes—increasing the cost of junk food, in particular—as a means to promote healthier choices found that, in a lab setting at least, when unhealthy foods cost more, people tended to eat them less.

Now, new research attempts to size up the value of sin taxes in the real world. A study published this week in the Archives of Internal Medicine followed more than 5,000 people from 1985-1986 to 2005-2006, tracking food consumption habits, as well as height, weight and blood sugar levels. They then compared that data with information about food costs across the 20-year period. Researchers found that, incremental increases in price of unhealthy foods resulted in incremental decreases in consumption. In other words, when junk food cost more, people ate it less.

Analyzing the cost of soda and delivery pizza in terms of adjusted 2006 dollars, the researchers found that, during the 20-year study period, pizza and soda costs actually went down—making them more accessible for less. Yet, their analysis also showed that every 10% increase in cost was associated with a decrease in calorie consumption—7% for soda, and 11. 5% for pizza. What's more, a $1 increase in soda price was associated with lower daily caloric intake (about 124 calories less per day on average), lower body weight (2. lbs. less, on average) and better blood sugar levels, according to the researchers. Similar trends were seen for a $1 hike in pizza cost, and when both pizza and soda costs increased by $1, the effects were further amplified, the researchers found. Along with colleagues, lead author Kiyah J. Duffey, from the Department of Nutrition at the University of North Carolina, Chapel Hill, points to the results as possible evidence supporting the use of taxes as a means to promote healthier eating habits.

Duffey and co-authors suggest that, based on these findings, an 18% surcharge on soda and delivery pizza could, on average, cut 56 calories per person per day—a reduction that means dropping five pounds per person during the course of a year. In an accompanying editorial in the Archives of Internal Medicine, Drs. Mitchell Katz and Rajiv Bhatia of the San Francisco Department of Public Health argue that it's time to put these proposed policies into practice to combat obesity. They suggest that taxes on unhealthy foods could go toward promoting healthier behaviors.

Katz and Bhatia write: "Copying a successful tactic of anti-tobacco crusaders, the funds also could be used to counter the lavish advertising of soda and junk food or for 'marketing' ordinary tap water. " The study and accompanying editorial come the same week that Bill Clinton announced the result of a three-year study finding that large beverage companies are voluntarily reducing the sales of sugary sodas in schools, and New York politicians are again bandying about the possibility of a soda tax. And all of these developments add to the already heated debate over the merits of enforcing public health mandates through taxes, of course.

Yet, while sin taxes are already widespread across the U. S. in the form of cigarette surcharges—Washington state just tacked another $1 in taxes onto a pack of cigarettes, for example—for many, the growing efforts to govern food choices through tariffs go too far. What do you think? Are junk food taxes good public health policy? Or are they indicative of a dangerous trend toward government interference in our freedom of choice—"punishing people for enjoying life once in a while," as one detractor put it? Read more: http://healthland. time. com/2010/03/10/study-sin-taxes-promote-healthier-food-choices/#ixzz1BvAf9j11

Obesity costs U. S. businesses about $45 billion a year in medical expenses and lost productivity. As a result, strategies that were once unthinkable for keeping the population's weight in check may soon become reality. In coming months, it's likely one or more states and municipalities will try to impose taxes on soda, sweets, or other types of "junk food," modeled on existing cigarette taxes. To the Bush Administration, such "obesity taxes" were an anathema, even though 27 states have already imposed small tariffs of 7% to 8% on vending machine snacks such as candy, soda, and baked goods.

Now the combination of a budget-busting recession and a citizenry that keeps getting fatter is causing legislators to consider more drastic steps. Late last year, New York Governor David A. Paterson proposed an 18% sales tax on non-diet soda and sugary juice drinks for the fiscal year starting in April. Such a tax, he says, would raise $404 million this year and $539 million in 2010, to be used for fat-fighting public health programs. Paterson has run into stiff opposition from the soft-drink industry. But several other states are mulling such taxes, says Kelly D.

Brownell, director of Yale University's Rudd Center for Food Policy & Obesity. "I've been contacted by a number of state legislators recently," he says. "I think it's only a matter of time before it happens. " In a statement, the American Beverage Assn. labeled Paterson's soda tax proposal "a money grab that will raise taxes on middle-class families. " Opponents also note that new levies would fail to address the many complex factors that contribute to weight gain. Yet studies have shown a clear correlation between costs and consumer behavior. A Rand Corp. urvey of 59 cities found that children gain more weight if they live in communities where fruit and vegetables are expensive. And the University of Florida just published a study showing that the more alcohol costs, the less people imbibe. Academics also say high tobacco taxes deserve much of the credit for cutting the U. S. smoking rate from 42% in 1964 to below 20% now. Economist Frank J. Chaloupka, director of the Health Policy Center at the University of Illinois at Chicago, cautions that a junk food tax could cause people to simply switch to other foods that are just as high in calories.

Still, he contends, with an 18% tax "you would likely see some noticeable impact on consumption. " Any sweeping obesity tax is likely to run into another snag: how to define "junk food. " Liz Morrill, chief executive officer of Fizzy Lizzy, a brand of sparkling juices, complains that Paterson's proposed tax is "completely irrational" because it would tax her product but not containers labeled "100% fruit juice," though those drinks may have the same amount of sugar.

Any obesity tax must be based on such criteria as calories and sugars per ounce, Morrill argues. The French government, for one, has embraced this logic. It's considering a tax of 5. 5% to 19. 6% on all foodstuffs the government deems "too rich, too sweet, too salty," and not strictly necessary. It remains to be seen if the American public will swallow more dietary taxes. In November, Maine voters overturned a wholesale tax on sodas and the syrup used to make soda that the governor had signed into law last April.

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