Part 7: "Sin Taxes"
Sin taxes are increased taxes imposed upon behaviors that are associated with a vice. We are most familiar with sin taxes on tobacco and alcohol, but there are many more. Nevada , for instance, has examined legalizing and heavily taxing marijuana use as well as a potential tax on prostitution (which is already legal in Nevada ).
Two reasons are offered in support of sin taxes. First, raising the cost of the behavior will discourage citizens from engaging in that behavior. For instance, someone who smokes a pack of cigarettes at $3 might stop smoking if costs suddenly increase to $6 a pack. Second, sin taxes increase revenue for the government without as much opposition as higher sales, income, or property taxes create. It is interesting to note that the two reasons to support sin taxes are not necessarily compatible. If it is about raising money, then you should hope that people continue the behavior. Whereas if it is about discouraging behavior, then you should not expect to raise much money since people stop the activity.
Should the state be imposing sin taxes at all? We have already seen John Stuart Mill's take on this question when he argued that it is a violation of individual liberty/freedom to tax a behavior more heavily than other behaviors. To allow a state to impose sin taxes is to allow the state to de facto ban a behavior, thereby taking away our liberty to engage in it. Paternalists are more apt to support sin taxes on the grounds that they provide the proper incentive for people to stop behaviors that are harmful to themselves. Devlin would also favor them for the same reasons that Mill opposes them.
WEBLINK: Ponder these arguments as you read "The Sin Tax: Economic and Moral Considerations" Click here to view the article.