Sin tax

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A sin tax (also known as a sumptuary tax , or vice tax) is an excise tax specifically levied on certain goods deemed harmful to society and individuals, such as alcohol, tobacco, drugs, candies, soft drinks, fast foods, coffee, sugar, gambling, and pornography. [1] In contrast to Pigovian taxes, which are to pay for the damage to society caused by these goods, sin taxes are used to increase the price in an effort to lower demand, or failing that, to increase and find new sources of revenue. Increasing a sin tax is often more popular than increasing other taxes. However, these taxes have often been criticized for burdening the poor and disproportionately taxing the physically and mentally dependent. [2]

Contents

Summary

The enactment of sin taxes on harmful activities varies by jurisdiction. In many cases, sumptuary taxes are implemented to mitigate use of alcohol and tobacco, gambling, and vehicles emitting excessive pollutants. Sumptuary tax on sugar and soft drinks has also been suggested. [3] Some jurisdictions have also levied taxes on recreational drugs such as cannabis where it has been legalized and regulated. [4]

Revenue generated by sin taxes supports many projects imperative in accomplishing social and economic goals. [5] American cities and counties have utilized funds from sin taxes to expand infrastructure, [6] while in Sweden the tax for gambling is used for helping people with gambling problems. Public acceptance of sumptuary taxes may be greater than income tax or sales tax.

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See also

Related Research Articles

<span class="mw-page-title-main">Cigarette</span> Small roll of cut tobacco designed to be smoked

A cigarette is a narrow cylinder containing a combustible material, typically tobacco, that is rolled into thin paper for smoking. The cigarette is ignited at one end, causing it to smolder; the resulting smoke is orally inhaled via the opposite end. Cigarette smoking is the most common method of tobacco consumption. The term cigarette, as commonly used, refers to a tobacco cigarette, but the word is sometimes used to refer to other substances, such as a cannabis cigarette or an herbal cigarette. A cigarette is distinguished from a cigar by its usually smaller size, use of processed leaf, and paper wrapping, which is typically white. Most modern cigarettes are filtered, although this does not make the smoke inhaled from them contain fewer carcinogens and harmful chemicals.

<span class="mw-page-title-main">Tobacco smoking</span> Practice of burning tobacco and breathing the resulting smoke

Tobacco smoking is the practice of burning tobacco and ingesting the resulting smoke. The smoke may be inhaled, as is done with cigarettes, or simply released from the mouth, as is generally done with pipes and cigars. The practice is believed to have begun as early as 5000–3000 BC in Mesoamerica and South America. Tobacco was introduced to Eurasia in the late 17th century by European colonists, where it followed common trade routes. The practice encountered criticism from its first import into the Western world onwards but embedded itself in certain strata of a number of societies before becoming widespread upon the introduction of automated cigarette-rolling apparatus.

<span class="mw-page-title-main">Rolling paper</span> Paper used for making cigarettes

Rolling paper is a specialty paper used for making cigarettes. Rolling papers are packs of several cigarette-size sheets, often folded inside a cardboard wrapper. They are also known as 'blanks', which are used to encase tobacco or cannabis. It may be flavoured.

<span class="mw-page-title-main">Indirect tax</span> Type of tax

An indirect tax is a tax that is levied upon goods and services before they reach the customer who ultimately pays the indirect tax as a part of market price of the good or service purchased. Alternatively, if the entity who pays taxes to the tax collecting authority does not suffer a corresponding reduction in income, i.e., impact and tax incidence are not on the same entity meaning that tax can be shifted or passed on, then the tax is indirect.

A fat tax is a tax or surcharge that is placed upon fattening food, beverages or on overweight individuals. It is considered an example of Pigovian taxation. A fat tax aims to discourage unhealthy diets and offset the economic costs of obesity.

<span class="mw-page-title-main">Prevalence of tobacco use</span> Percentage of population smoking tobacco

Prevalence of tobacco use is reported by the World Health Organization (WHO), which focuses on cigarette smoking due to reported data limitations. Smoking has therefore been studied more extensively than any other form of consumption.

<span class="mw-page-title-main">Internality</span>

An internality is the long-term benefit or cost to an individual that they do not consider when making the decision to consume a good or service. One way this is related to behavioral economics is by means of the concept of hyperbolic discounting, in which immediate consequences of a decision are disproportionately weighed compared to the future consequences. A potential cause is lack of access to full information regarding the associated costs and benefits prior to consumption. This contrasts with traditional economic theory, which makes the assumption that individuals are rational decision makers who take all personal costs into account when paying for goods and services.

<span class="mw-page-title-main">Excise</span> Goods tax levied at the moment of manufacture rather than sale

An excise, or excise tax, is any duty on manufactured goods that is normally levied at the moment of manufacture for internal consumption rather than at sale. Excises are often associated with customs duties, which are levied on pre-existing goods when they cross a designated border in a specific direction; customs are levied on goods that become taxable items at the border, while excise is levied on goods that came into existence inland.

<span class="mw-page-title-main">Smoking</span> Practice of inhaling a burnt substance for psychoactive effects

Smoking is a practice in which a substance is combusted and the resulting smoke is typically inhaled to be tasted and absorbed into the bloodstream of a person. Most commonly, the substance used is the dried leaves of the tobacco plant, which have been rolled with a small rectangle of paper into an elongated cylinder called a cigarette. Other forms of smoking include the use of a smoking pipe or a bong.

<span class="mw-page-title-main">Smoking in New Zealand</span> Overview of smoking in New Zealand

The use of tobacco for smoking in New Zealand has been subjected to government regulation for a number of decades. On 10 December 2004, New Zealand became the third country in the world to make all indoor workplaces including bars and restaurants smoke-free. The smoking rate in New Zealand was about 8% as of 2023 when the new government planned to eliminate the nation's smoking ban to fund tax cuts.

<span class="mw-page-title-main">Cigarette taxes in the United States</span> Taxes imposed on sale of cigarettes in the U.S.

In the United States, cigarettes are taxed at both the federal and state levels, in addition to any state and local sales taxes and local cigarette-specific taxes. Cigarette taxation has appeared throughout American history and is still a contested issue today.

<span class="mw-page-title-main">Tobacco politics</span> Politics surrounding the use and distribution of tobacco

Tobacco politics refers to the politics surrounding the use and distribution of tobacco.

About a quarter of adults in Turkey smoke. Smoking in Turkey is banned in government offices, workplaces, bars, restaurants, cafés, shopping malls, schools, hospitals, and all forms of public transport, including trains, taxis and ferries. Turkey's smoking ban includes provisions for violators, where anyone caught smoking in a designated smoke-free area faces a fine of 188 Turkish lira (~€9.29/$9.90/£8.22) and bar owners who fail to enforce the ban could be fined from 560 liras for a first offence up to 5,600 liras. The laws are enforced by the Ministry of Agriculture and Forestry of Turkey.

<span class="mw-page-title-main">Cigarette smoking among college students</span> Smoking cigarettes during the college years

The majority of lifelong smokers begin smoking habits before the age of 24, which makes the college years a critical time for tobacco companies to convince college students to pick up the habit of cigarette smoking. Cigarette smoking in college is seen as a social activity by those who partake in it, and more than half of the students that are users do not consider themselves smokers. This may be because most college students plan to quit smoking by the time that they graduate.

<span class="mw-page-title-main">Smoking in Syria</span> Legality, popularity and history of smoking in Syria

Smoking in Syria is steadily increasing in popularity amongst the Syrian population, mainly in the forms of cigarettes or narghiles. In Syria, the General Organization of Tobacco manages the growth and exportation of tobacco products. Syrians collectively spend about $600 million per year on tobacco consumption. As of 2010, 20% of women and 60% of men smoke and 98% of the overall population is affected by passive smoking. Narghiles and cigarettes are the two main forms of tobacco consumption. Despite the assumption that smoking, specifically the narghile, is embedded in Syrian culture, this phenomenon has only recently become widespread. Health officials are currently working on smoking cessation programs and policies, to remove this idea that smoking in Syria is an essential part of the culture, to educate regarding health effects, and to prevent citizens from smoking in public places.

<span class="mw-page-title-main">Smoking in Germany</span> Overview of smoking in Germany

In Germany, smoking is widespread and is subject to very few and lax regulations compared to other countries in Europe. Tobacco taxes in Germany are among the lowest in Europe. Germany ranks last on the Tobacco Control Scale and has sometimes been referred to as the "smoker's paradise" of Europe. According to German addiction researcher Heino Stöver, Germany has "[...] more cigarette vending machines than any other country in the world."

<span class="mw-page-title-main">Smoking in Finland</span>

In Finland, the smoking figures are among the lowest in Europe. There are several factors that have influenced the decrease in the smoking prevalence, such as legislative actions, health promotion and national monitoring systems, policies aimed at reducing tobacco consumption through public awareness campaigns, advertising bans and increased taxation. Ministry of Social Affairs and Health has the leading role in tobacco control in Finland, and one of their main aims is have a more effective ban on sale of tobacco products to children and young people and to prevent sale of illegal tobacco products. Among the key elements in the successful tobacco policy is the traditional collaboration between the health authorities and non-governmental organisations, and intensive health promotion.

Smoking in South Korea has decreased overall for both men and women in the past decades. However, a high prevalence of tobacco use is still observed, especially with the rise of novel tobacco products such as e-cigarettes and heat-not-burn tobacco products. There are socioeconomic inequalities in smoking prevalence according to gender, income, education, and occupational class. Advocates call for measures to reduce the smoking rates and address smoking inequalities using a combination of monitoring and tobacco control policies. These measures include significant price hikes, mandatory warning photos on cigarette packs, advertising bans, financial incentives, medical help for quitting, and complete smoking bans in public places.

Tobacco 21 was a United States national campaign aimed at raising the minimum legal age to purchase tobacco and nicotine in the United States to 21. The campaign ended when Congress passed and President Donald Trump signed the 2020 United States federal budget which raised the federal smoking age to 21.

<span class="mw-page-title-main">Cigarette excise in Indonesia</span> Type of tax in Indonesia

Cigarette excise tax in Indonesia is a kind of tax that is functioned to control the retail prices of cigarettes done the Indonesian government on cigarettes and other tobacco products such as cigarettes, cigars, and leaf cigarettes. This provision applies with the existence of Act Number 11 of 1995 concerning Excise, with some revisions referring to Act Number 39 of 2007. This rule was then complemented by Act Number 28 of 2009 concerning Regional Taxes and Regional Levies. Taxation of tobacco with cigarette excise is well distinguished.

References

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