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Author Topic: Do sin taxes work?  (Read 137 times)
Hydrogen
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August 15, 2018, 11:20:14 AM
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MANY goverrments use “sin taxes” to dissuade people from smoking and drinking alcohol. In recent years, some lawmakers have turned their cross-hairs to a different vice: sugar. Obesity is on the rise all across the world. Forty per cent of Americans today are obese, up from around 15% in 1980. Several countries, along with a handful of American cities, have introduced taxes on sugary drinks in recent years. Their governments hope that these levies will both raise revenues and reduce how much sugar people consume. But do sin taxes even work?

Policymakers are right to think that sin taxes lead to lower consumption. The exact estimates vary from study to study, but economists have found that in general, a 1% increase in the price of tobacco or alcohol in America leads to a 0.5% decline in sales. In practical terms, this means that sales of tobacco and alcohol are more responsive overall to price changes than say, sales of many common household goods, such as coffee. Similarly, while it is still too early to determine whether these taxes will have any effect on obesity, studies have shown that they have at the very least reduced sales in Mexico, and the cities of Berkeley and Philadelphia.

But if there is a problem with sin taxes, it is not that they are ineffective. Rather, it is that they are inefficient. 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. A similar logic applies for sugar taxes. Tobacco presents a slightly different problem. Nicotine is highly addictive, meaning that there are relatively few people who smoke cigarettes only occasionally.

It is easiest to justify taxes on particular goods when they present what economists call “negative externalities”. When a driver buys fuel for his car, both he and the petrol station benefit. Yet cars emit carbon dioxide in their wake, which suggests that it would be only fair for drivers to pay taxes to offset the environmental damage they cause. 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. While obese people probably do present net costs to governments, smokers tend to die earlier, meaning that they probably save governments money since they draw less from state pensions. 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.

https://www.economist.com/the-economist-explains/2018/08/10/do-sin-taxes-work

Here we have an interesting piece on "sin taxes".

Being that bitcoin is the opposite of sin. Bitcoin being a virtuous and saintly thing for a coin of exchange. Perhaps a new tax bracket should be devised for bitcoin that is exceedingly low. Being that bitcoin and crypto can be utilized towards significant degrees of progress and innovation for the society we enjoy.

Bitcoin could also function as a form of quasi welfare being that there is no minimum balance and this opens doors to unbanked and similar poor demographics having access to electronic payment despite not meeting banks minimum criteria.

Should crypto be taxed @ exceedingly low rates due to it driving economic progress, creating value and providing critical utility to neglected demographics. All of which undoubtedly contributes towards ennobling man and benefiting society?

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August 15, 2018, 11:55:02 AM
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Sin taxes usually don't work in most occasions. Given that only a handful of the population drinks alcohol and go on in a binge-drinking session every day, this appeals negatively to those who only drink on the minimum since they are taxed higher than what they should be. On the passage about sugary drinks, I think it's also about time to increase it since a large demographic consumes an exorbitant amount of sugary drinks which leads to obesity. It can hit two birds in one stone which is entirely different on the taxes regarding alcoholic drinks since only a small portion of the population are into it. It works, but only at the right products.

Bitcoin could also function as a form of quasi welfare being that there is no minimum balance and this opens doors to unbanked and similar poor demographics having access to electronic payment despite not meeting banks minimum criteria.

True, but I don't think this gives access to the unbanked into the gates of e-Commerce considering that only a few merchants are brave enough to accept bitcoin as is. Moreso, bitcoin's volatility would scare the hell out of people who are trying to ease their lives by buying into bitcoin and making it their savings. Personally, one way or another people are still going to need banks in their lives and that's the harsh reality of today's society.


Should crypto be taxed @ exceedingly low rates due to it driving economic progress, creating value and providing critical utility to neglected demographics. All of which undoubtedly contributes towards ennobling man and benefiting society?

I doubt the governments would like that. If anything, they would be targeting crypto users for taxes and profit. Even traditional exports which greatly contribute to the economy are being taxed in an unacceptable fashion, why would we expect bitcoin and other crypto to be different?

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August 15, 2018, 04:11:27 PM
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But if there is a problem with sin taxes, it is not that they are ineffective. Rather, it is that they are inefficient. 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. A similar logic applies for sugar taxes. Tobacco presents a slightly different problem. Nicotine is highly addictive, meaning that there are relatively few people who smoke cigarettes only occasionally.

I think this is a small price to pay. If I have to pay an extra dollar or two for my pack of beer once or twice a month, I'm not going to notice it. The alcoholic who is paying an extra few dollars on the bottle of vodka he buys every day is definitely going to notice it. Sin taxes have been shown to work.

I'd also support them from a Pigovian tax point of view - the extra tax on these activities can be used to offset the excess healthcare costs associated with obesity, alcoholism, smoking, etc.

Having said all that, crypto definitely shouldn't be subject to a sin tax.

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August 15, 2018, 04:54:08 PM
Last edit: August 15, 2018, 05:09:04 PM by Pearls Before Swine
 #4

I'd also support them from a Pigovian tax point of view - the extra tax on these activities can be used to offset the excess healthcare costs associated with obesity, alcoholism, smoking, etc.
I am not economist, but that sounds like a reasonable idea.  Kind of like the sugar tax on soft drinks.

I would also think that the purpose of sin taxes is not to discourage the 'sins' but to produce a consistent stream of revenue for the government.  When you have a large user base who's addicted to alcohol, cigarettes, and so forth you have people who are going to pay that tax regardless of how high it is.  Look at the price of cigarettes in much of the United States.  They're more than $10 per pack in much of the country, and most of that is tax if I'm not mistaken and smokers will find the money to smoke somehow.  
The only exception being Coca Cola Classic which has a specific recipe that can't be changed.
I've been in the soda aisle in the grocery store recently and I can tell you that is not the case.  Pepsi, RC Cola, and all the store brand colas and all the other sugared drinks are still very much in effect.  Energy drinks are also still the rage where I live.
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August 15, 2018, 05:06:58 PM
 #5

The sin tax on sugar has worked, not by getting consumers to stop buying the stuff, but by getting the vendors to change their recipes to avoid the tax.

The sugar tax in the UK is ONLY on fizzy drinks. And people are price sensitive when buying carbonated drinks. If one brand is 15p cheaper than another, that is what people will buy.

So pretty much all the drinks manufacturers reduced their sugar so that their drink wouldn't be taxed. The only exception being Coca Cola Classic which has a specific recipe that can't be changed.

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August 16, 2018, 05:32:35 AM
 #6

The sin tax on sugar has worked, not by getting consumers to stop buying the stuff, but by getting the vendors to change their recipes to avoid the tax.

The sugar tax in the UK is ONLY on fizzy drinks. And people are price sensitive when buying carbonated drinks. If one brand is 15p cheaper than another, that is what people will buy.

So pretty much all the drinks manufacturers reduced their sugar so that their drink wouldn't be taxed. The only exception being Coca Cola Classic which has a specific recipe that can't be changed.
Taxes actually have good and bad traits. Important is the head of the tax collection, who are they? How do they collect? It is interesting to collect tax is useful for society. But many people have taken advantage of it to do bad things, harming people. Get rid of it and stop bad behavior.

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August 16, 2018, 08:56:53 AM
 #7

I think that they're probably more effective as a means of revenue for the government, than it is to reduce people's consumption of certain things. Obviously, there are going to be decreases in demand as prices goes up, but probably not by that much.

I feel like that a lot of the decrease in consumption of alcohol and cigarettes have really been mostly a result of education, instead of the sin taxes. For example, now that plain packaging laws are instated in my country, as well as education of the harms of cigarettes, demand for these products have drastically gone down. Yet, long term smokers are going to continue to buy into their habits, regardless of the price.

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Should crypto be taxed @ exceedingly low rates due to it driving economic progress, creating value and providing critical utility to neglected demographics. All of which undoubtedly contributes towards ennobling man and benefiting society?

Depends on the use. If it's normal income, just in the form of BTC, it shouldn't be taxed any differently imo. For other uses like mining or capital gains, I think that lower taxes should be implemented, as a lot of the tax rules in many countries result in double taxing of crypto as a result of the tax system not being designed for crypto at all. But, it doesn't mean that governments will do this. In fact, there is pretty much no chance that they'll show such positivity towards crypto taxation.

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August 16, 2018, 09:14:08 AM
 #8

Sin taxes are really nothing more than means to dissuade people from doing something that is perceived to be bad for them while raising more money at the same time. Two birds with one stone. I generally support them when aimed at smoking.

Should crypto be taxed @ exceedingly low rates due to it driving economic progress, creating value and providing critical utility to neglected demographics. All of which undoubtedly contributes towards ennobling man and benefiting society?

If we want crypto to be treated as just money, why? It's only as good as what it's used for, so tax breaks that are applied towards certain industries should rightfully be applied to it only when used within that. The argument sounds very similar to how Bitcoin should be illegal because criminals use it, and Bitcoiners are the first to point out that it's just money.

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August 16, 2018, 09:31:48 AM
 #9



Depends on the use. If it's normal income, just in the form of BTC, it shouldn't be taxed any differently imo. For other uses like mining or capital gains, I think that lower taxes should be implemented, as a lot of the tax rules in many countries result in double taxing of crypto as a result of the tax system not being designed for crypto at all. But, it doesn't mean that governments will do this. In fact, there is pretty much no chance that they'll show such positivity towards crypto taxation.
Also expect them to have policies appropriate to the actual conditions of the market. Investors are not panicked, reassuring investors. Accordingly, the way they use tax can be initially not really correct, over time they will adjust.
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September 24, 2018, 12:55:54 PM
 #10

At all times of history, people paid taxes. and those who did not pay from them forcibly withdrew their debts, and that before this people did not get used to pay on time.

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September 24, 2018, 02:11:26 PM
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MANY goverrments use “sin taxes” to dissuade people from smoking and drinking alcohol. In recent years, some lawmakers have turned their cross-hairs to a different vice: sugar. Obesity is on the rise all across the world. Forty per cent of Americans today are obese, up from around 15% in 1980. Several countries, along with a handful of American cities, have introduced taxes on sugary drinks in recent years. Their governments hope that these levies will both raise revenues and reduce how much sugar people consume. But do sin taxes even work?

Policymakers are right to think that sin taxes lead to lower consumption. The exact estimates vary from study to study, but economists have found that in general, a 1% increase in the price of tobacco or alcohol in America leads to a 0.5% decline in sales. In practical terms, this means that sales of tobacco and alcohol are more responsive overall to price changes than say, sales of many common household goods, such as coffee. Similarly, while it is still too early to determine whether these taxes will have any effect on obesity, studies have shown that they have at the very least reduced sales in Mexico, and the cities of Berkeley and Philadelphia.

But if there is a problem with sin taxes, it is not that they are ineffective. Rather, it is that they are inefficient. 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. A similar logic applies for sugar taxes. Tobacco presents a slightly different problem. Nicotine is highly addictive, meaning that there are relatively few people who smoke cigarettes only occasionally.

It is easiest to justify taxes on particular goods when they present what economists call “negative externalities”. When a driver buys fuel for his car, both he and the petrol station benefit. Yet cars emit carbon dioxide in their wake, which suggests that it would be only fair for drivers to pay taxes to offset the environmental damage they cause. 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. While obese people probably do present net costs to governments, smokers tend to die earlier, meaning that they probably save governments money since they draw less from state pensions. 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.

https://www.economist.com/the-economist-explains/2018/08/10/do-sin-taxes-work

Here we have an interesting piece on "sin taxes".

Being that bitcoin is the opposite of sin. Bitcoin being a virtuous and saintly thing for a coin of exchange. Perhaps a new tax bracket should be devised for bitcoin that is exceedingly low. Being that bitcoin and crypto can be utilized towards significant degrees of progress and innovation for the society we enjoy.

Bitcoin could also function as a form of quasi welfare being that there is no minimum balance and this opens doors to unbanked and similar poor demographics having access to electronic payment despite not meeting banks minimum criteria.

Should crypto be taxed @ exceedingly low rates due to it driving economic progress, creating value and providing critical utility to neglected demographics. All of which undoubtedly contributes towards ennobling man and benefiting society?

I also agree that Bitcoin and cryptocurrencies are not sin but rather a salvation for those who are in need. I don't think government can take taxes on our crypto earnings and even in our Bitcoin due to lack of details that they can use in order to declare it as one of our assets. Therefore it would be hard to tax an earning without valid declarations.

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September 24, 2018, 02:14:08 PM
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Policy makers are right to think that the tax on sin causes lower consumption

I can show you 2 cases in my country

- tobacco

The tax increases every year, and even 2 times per year recently. About 15 years a cigarette pack cost about $2.5, now it costs $8, and the government plans to increase the price to 10 euros.
Does it make people stopping to smoke: nope

- soda
Companies (such as Coca-Cola) have to pay a sugar tax. What did it give? Instead of increasing the price they have reduced the quantities, the bottles have their size reduced but the price is the same, (so it costs more) some have reduced the quantities AND increased the price

So, charging the companies with a new tax has an impact on consumers at the end.

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September 25, 2018, 12:10:38 AM
 #13

This article, also from the Economist, gives a bit more insight into the nature of so-called "sin taxes." 

Some pretty morbid, but interesting facts here.

"Advocates of taxes on vices such as smoking and obesity argue that they also impose negative externalities on the public, since governments have to spend more to take care of sick people. However, policy papers tend to overstate the economic costs of activities like smoking because they rarely account for what would happen without them. Although unhealthy people tend to cost governments more money while they are alive, this is at least partially offset by the morbid fact that they tend to die earlier, and so draw less from services like pensions.

Different vices have different economic costs since they harm people in different ways. Save for the exceptionally overweight, most obese people do not die much earlier. But they do tend to require more medical attention than their healthier peers, often spanning the course of several decades. So obesity does impose net costs on taxpayers."


https://www.economist.com/international/2018/07/26/sin-taxes-eg-on-tobacco-are-less-efficient-than-they-look
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September 25, 2018, 12:28:23 AM
 #14

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MANY goverrments use “sin taxes” to dissuade people from smoking and drinking alcohol. In recent years, some lawmakers have turned their cross-hairs to a different vice: sugar. Obesity is on the rise all across the world. Forty per cent of Americans today are obese, up from around 15% in 1980. Several countries, along with a handful of American cities, have introduced taxes on sugary drinks in recent years. Their governments hope that these levies will both raise revenues and reduce how much sugar people consume. But do sin taxes even work?

Policymakers are right to think that sin taxes lead to lower consumption. The exact estimates vary from study to study, but economists have found that in general, a 1% increase in the price of tobacco or alcohol in America leads to a 0.5% decline in sales. In practical terms, this means that sales of tobacco and alcohol are more responsive overall to price changes than say, sales of many common household goods, such as coffee. Similarly, while it is still too early to determine whether these taxes will have any effect on obesity, studies have shown that they have at the very least reduced sales in Mexico, and the cities of Berkeley and Philadelphia.

But if there is a problem with sin taxes, it is not that they are ineffective. Rather, it is that they are inefficient. 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. A similar logic applies for sugar taxes. Tobacco presents a slightly different problem. Nicotine is highly addictive, meaning that there are relatively few people who smoke cigarettes only occasionally.

It is easiest to justify taxes on particular goods when they present what economists call “negative externalities”. When a driver buys fuel for his car, both he and the petrol station benefit. Yet cars emit carbon dioxide in their wake, which suggests that it would be only fair for drivers to pay taxes to offset the environmental damage they cause. 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. While obese people probably do present net costs to governments, smokers tend to die earlier, meaning that they probably save governments money since they draw less from state pensions. 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.

https://www.economist.com/the-economist-explains/2018/08/10/do-sin-taxes-work

Here we have an interesting piece on "sin taxes".

Being that bitcoin is the opposite of sin. Bitcoin being a virtuous and saintly thing for a coin of exchange. Perhaps a new tax bracket should be devised for bitcoin that is exceedingly low. Being that bitcoin and crypto can be utilized towards significant degrees of progress and innovation for the society we enjoy.

Bitcoin could also function as a form of quasi welfare being that there is no minimum balance and this opens doors to unbanked and similar poor demographics having access to electronic payment despite not meeting banks minimum criteria.

Should crypto be taxed @ exceedingly low rates due to it driving economic progress, creating value and providing critical utility to neglected demographics. All of which undoubtedly contributes towards ennobling man and benefiting society?
Bitcoin is an anonymous coin. I do not think they can levy taxes if someone just keeps stocking up on exchange. They can only tax the exchange through someone's deal
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September 25, 2018, 12:30:14 AM
 #15

I used to be a very enthusiastic smoker. Where I'm at in the UK ciggies and tobacco cost a fucking fortune now.

Did the sin tax work on me? Er, no. Every few months I went abroad and bought shitloads of tobacco and brought it back. If the taxes here had been more reasonable I would've happily not bothered. Instead I got a nice holiday and saved a ton of money too.

Overall they probably do act as an incentive to moderate or give up for the majority, but not the hard core. The heaviest users will cut back in other areas of their life to keep their consumption up.

Crypto is unlikely to ever have a special rate in the places it's already taxed, and certainly not a rate that subsidises its use at the expense of other things.

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September 25, 2018, 01:06:16 AM
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Of course sin taxes work. You might think that is up to a person to decide whether to smoke or drink, or eat sugar. But in the end ppl end up in hospitals and health care ministry has to cover all the bills. Especially in countries that has free medical care. Where as this money could be used elsewhere -to build new roads, improve education etc.
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September 25, 2018, 05:57:44 AM
 #17

Bitcoin is addictive a as sugar. Smiley
I guess that ,in the near future,some governments will view crypto trading as something similar to gambling and they will tax it way higher,because it can create an addiction.
Anyway,in my country,all the sweets and all the foods that contains sugars is cheaper than the fruits and vegeatables.
Having a "sugar tax" will create a rebellion. Smiley
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September 25, 2018, 05:19:07 PM
 #18

If there is extra taxes on anything for religious reasons I find it repulsive.
What people do with their life only matters to them as long as it does not affect on anyone else.

If you charge taxes according to religion and put more taxes on beer because its illegal than you are a disgusting person. If however that person who drank the beer than drives his car of course tow it away. The laws only should applied when a person is hurting someone else, that is what laws are for.

Taxes should not be cheaper for bitcoin nor should be higher for beer, I get the luxury status because buying a toilet paper and buying a boat should have different brackets but that is about it.
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September 25, 2018, 07:42:27 PM
 #19

Whenever I see governments claiming that they are charging taxes for the benefit of people I cannot stop laughing, we need to remember that is just an excuse, what the government wants with taxes is very clear, they want more money and they are just excusing themselves and trying to make it seem as if they care about the population when the only thing they care about is the money that they have in their coffers and nothing more.

Because at the end the people that want to consume the products which are taxed that way will keep doing it, the businesses that creates those products are going to pass the cost to the consumer so those businesses are going to be in business no matter what, and as always the only ones that benefits out of that tax are to governments.
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September 27, 2018, 10:37:04 AM
 #20

Of course sin taxes work. You might think that is up to a person to decide whether to smoke or drink, or eat sugar. But in the end ppl end up in hospitals and health care ministry has to cover all the bills. Especially in countries that has free medical care. Where as this money could be used elsewhere -to build new roads, improve education etc.
One thing with sin taxes is that people will peradventure find a way to just simply cut back on some things and then find a way to readjust, but does not necessary curtail the consumption of such things directly.

Most of the time, it still all falls back on the consumers anyway and one thing for someone who is already addicted, they would always go even above themselves to do whatever they are craving for. So, does it necessarily work, maybe on just few people that can do without it.
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