Tammy Sonnier
English 122
Ashford University
November18, 2013
Introduction
It is undeniable fact that the issue of sin taxes existed long before the last financial crisis that hit the globe in the year 2008. The current global situation faced with challenges of health and financial crises, sin taxes are designed to maximize government expenditures with less loss and to reduce or regulate undesirable behaviors considered harmful to the society. The proposed sin taxes by various governments globally aim products such alcohol beverages, bullets, sugary soft drinks, fatty snacks, and gasoline among other products(Black & Mohamed, 2006).
Therefore, this research will analyze in detail the importance of sin taxing to various commodities with the core aims of promoting healthy lifestyles, improving society health outcomes, reducing government expenditure, and enhancing environmental sustainability. The success of this research is highly dependable on the use of varied research articles, journals, and textbooks. Cumulatively, the research will illuminate light on the different benefits associated with the sin taxes.
Sin taxes discourages people from adopting unhealthy behaviors(Reiter, 1995). The taxes are designed with the core aim of raising prices of the sinful goods to make people opt for healthier goods. However, this do not happen in accordance with the expectations since increasing the taxes on the sinful good leads to people substituting it with an equally bad good. For instance, studies conducted by Ayyagari, Deb, Fletcher, Gallo, & Sindelar, 2009)revealed that when the taxes of beer were increased people opted to substitute it Marijuana consumption. Despite this substitution, sin taxes is still considered the most suitable method as rules and regulation on the use of the preferred substitute are enacted making people change their behaviors.
Obesity is one of the health challenges facing the world in the current times. This is highly attributed to the sedentary lifestyle people live. This includes high consumption of diet with high calories, sugared drinks, and sodas, which, directly contribute to the high rates of obesity. Imposing high taxes on these commodities is likely to reduce these products consumption hence, reducing global rates of obesity(Lyon & Schwab, 1991). It should be recognized that sin taxes is one of the best ways which governments raises their revenues. Despite the fact that the primary goal of sin taxes is promoting behavior change, sin taxes increases revenues which is used to finance projects hence, growth and sustainability(DePippo, 2002).
Sin taxes contribute directly to environmental protection and sustainability. This is evidenced by studies that reveal that sin taxes reduce the overall expenditure on the use of coal products such as gasoline and unleaded petrol. Imposing high taxes on these products reduce the overall expenditure on these products reducing their environmental impacts hence, environmental sustainability, and reduction in greenhouse gases effect(Black & Mohamed, 2006). Exposure to the use of the harmful products such as second hand smoking, and alcohol consumption predisposes individuals to health effects such as cancer and increased rates of road accidents. Consequently, sin taxes reduce these behaviors decreasing the incidence rates of their associated outcomes(Haavio & Kotakorpi, 2011).
(Ayyagari et al., 2009)concluded in their study that sin taxing aligns one’s private costs of consumption choices with their associated social costs resulting in behavior change due to their realization of the effects of their choices. The benefits realized from implementing sin taxes policies are less when compared to the outcomes from the achieved behavior change. For instance, Sirico, 1995asserts that sin taxes contributes to change in one’s moral behaviors. Consequently, this reduces one’s exposure to various health hazards hence, improving their outcomes through health promotion.
Conclusion
References
Ayyagari, P., Deb, P., Fletcher, J., Gallo, W. T., & Sindelar, J. L. (2009). Sin Taxes: Do Heterogeneous Responses Undercut Their Value? (Working Paper No. 15124). National Bureau of Economic Research. Retrieved from http://www.nber.org/papers/w15124
Black, P., & Mohamed, A. (2006). “sin” Taxes and Poor Households: Unanticipated Effects. South African Journal of Economics, 74(1), 131–136. doi:10.1111/j.1813-6982.2006.00053.x
Brunori, D. (2005). State Tax Policy: A Political Perspective. The Urban Insitute.
DePippo, D. J. (2002). I’ll Take My Sin Taxes Unwrapped and Maximized, with a Side of Inelasticity, Please. University of Richmond Law Review, 36, 543.
Haavio, M., & Kotakorpi, K. (2011). The political economy of sin taxes. European Economic Review, 55(4), 575–594. doi:10.1016/j.euroecorev.2010.06.002
Lyon, A. B., & Schwab, R. M. (1991). Consumption Taxes in a Life-Cycle Framework: Are Sin Taxes Regressive? (Working Paper No. 3932). National Bureau of Economic Research. Retrieved from http://www.nber.org/papers/w3932
Reiter, J. B. (1995). Citizens or Sinners - The Economic and Political Inequity of Sin Taxes on Tobacco and Alcohol Products. Columbia Journal of Law and Social Problems, 29, 443.
Sirico, R. A. (1995). The Sin Tax: Economic and Moral Considerations. Action Institute for the Study of Religion and Liberty.
