Can “Sin Taxes ? be ethically justified? Sin tax is a slang term for surcharges levied by local, state and federal governments on products considered by lawmakers to carry a high medical cost to society, such as alcohol, tobacco and gambling. Alcohol and tobacco have long been subject to sin taxes at the state and federal levels. Sin taxes began in the early 1600’s as a tax targeted towards morality. After the Civil War a one-cent tax was imposed on cigars, manufactured tobacco, beer wine and even playing cards. They were originally attempts to modify sinful behavior.
This was the beginning of “Sin Taxes ?. Today they are, primarily used to tax alcohol, tobacco, gambling and pornography. “The recent debates on health care reform have seen proposals for new and increased taxes to finance reform efforts. Sin taxes are, often promoted as an efficient means of discouraging such behaviors that might result in social problems. Critics of sin taxes often argue such taxes disproportionately have an impact on the poor and that the role of the government in dictating morality should be limited ?.
In defense of “Sin Taxes?. Dorsey, R. ,(fall 2010) p. 53. This author’s position is that increased sin taxes can be ethically justified, provided there is a clear understanding of how and how much of the increased revenues, will be disbursed to health care reform, because the sin tax is supposedly levied to promote healthy living behaviors. The revenues from increased sin taxes should not, be used to cover the budget deficits. There is a great need for health care reform in the United States.
Some lawmakers can ethically justify the increase in sin taxes because of its potential for financing health care reform. Otero, J (2011) found the benefactors of sin taxes are cities, states and federal governments. When faced with budget crisis, they often increase “Sin Taxes? on tobacco and alcohol to decrease deficits. Some argue that “Sin Taxes ? are an effective tactic to change behaviors and can aid in getting people to quit smoking, drinking and gambling. Financing issues are among the most difficult problems in health care.
“The current global economic crisis is forcing governments to consider a variety of methods to generate funds for infrastructure. In the United States, smoking-related illness and obesity epidemics are forcing public health institutions to consider a variety of methods to influence health behaviors of entire target groups. They use relevant theory to weigh and balance the arguments for and against the use of sin taxes. A position advocating the limited use of sin taxes is supported as a reasonable stance for the public health professional ?.
Rebecca Green (Jan/Feb 2011) The Ethics of Sin Taxes (p. 68). Because of the deteriorating federal budget, health care reform needs to be budget conscious over the next decade. If health care reform is to work, there must be cuts in federal and state spending. In the interim, in roll the increase in sin taxes. Local, state and federal governments stand to bring in billions of dollars over a period of just a few years from the increase of sin taxes. The majority of states have already adopted the sin tax proposal. These states are proposing their own health care reform.
Revenues have been appropriated towards the rehabilitation of individuals addicted to tobacco, alcohol and gambling. In addition to alcohol, tobacco and gambling sin taxes, new taxes are proposed on such items as sugary sodas, junk food and even plastic supermarket bags. The estimated revenue from the sugary soda alone is in the billions over just a couple of years. If the government used the revenue from the increase of alcohol, tobacco and gambling for health care reform, the sugary soda tax could help balance the budget deficits. Roger Dorsey (2010) p. 53-57 notes: ?
Opposing views on the sin tax issues, are said to be unfair, discriminatory and a threat to freedom of choice ?. While becoming more popular with legislatures at the state and federal level, sin taxes have generated significant controversy. A sharp increase in sin taxes has met opposition across the political spectrum. Less consumers means a loss of revenue, which could directly affect U. S. economy. Concurrently, a loss in revenue would affect the ability to pay for health care reform. Another downside of increased sin taxes is the effect it may have on global economy.
If undesirable behaviors are corrected that means less consumers of alcohol and tobacco. Less consumers means less generated revenue to finance the reform. Less revenue for the United States could see an effect on global economy. Other countries as well as the United States have their own debates going on over health care reform and the increase of “Sin Taxes?. One country in particular is the Philippines. They have seen a raging debate over the past 15 years over health care reform and increasing sin taxes. The debates came into the forefront again in 2012.
President Enrile of the Philippines said that the Department of Finance proposal of a 1000% excise tax increase on alcohol and tobacco products to pave the way for a unitary tax system could even result in a drop of revenue from said products. Antiporda, J. (19 Sep 2012) wrote: ‘Abrupt implementation of a unitary tax system on tobacco and alcohol products may defeat the goals of the government to raise additional revenue and encourage Fillipino’ to abstain, if not, totally quit smoking according to President Juan Enrile. He noted that shifting to a unitary system would only be effective
if it is done gradually and not abruptly like the DOF wants to do. It is not an abrupt one- time one-tier system. You have to gradually move this tier system over a period of time until you come to a merging point so you will not affect the market and your tax harvest so radically. Enrile also warned that imposing such high tax rate may, even make the billion additional revenue target unattainable because exceedingly high tax rates come with unavoidable costs. While he agrees with finance officials and health advocates that there is
an urgent need to eradicate diseases from smoking and drinking, Enrile said they should also consider the possible economic impact of proposal to ensure that objectives are met and irreversible errors are avoided. ‘ An article in the Philippine Star (2013 Jan 1) stated: ‘It was voted into law that the increments of tobacco and alcohol tax increases would generate P248. 49 billion, over the next five years. Some 70 percent of such collections would come from tobacco products. The law allocates 15 percent of incremental revenues for programs that would benefit tobacco farmers.
This would help prevent the smuggling of tobacco on the black market. Of the remaining 85 percent “shall be allocated for universal health care under the national health insurance program, medical assistance and health enhancement facilities, the annual requirements of which shall be determined by the Department of Health. ‘ ? The Philippines are not the only international country to get in on the sin tax bandwagon. Russia, Scandanavia, Denmark, Africa and the United Kingdom have all raised their sin taxes. It was undisclosed how these would be used. “Sin Taxes ? seem to be the ?
politically correct ? thing to do . When countries get into a budget cries, sin taxes are an easy target. They seem to create less of a stir among the general population, but how much is too much? Traditionally we think of sin taxes to be alcohol, tobacco and gambling. Everyday lawmakers are coming up with new “Sin Taxes? such as sodas and Twinkies?. Some lawmakers have lost sight of the fact of what “Sin Taxes? are all about. The whole purpose was to attack the consumers of alcohol and tobacco in hopes of having them abstain or at the very least be responsible consumers.
If the goal of the governments, is to have their people abstain from these dangerous drugs, why not make them illegal? It is doubtful, this will ever happen. The loss of revenue for all of these countries would be devastating. The pros and cons of increased taxes weigh heavily on all people of all nations. Some opposing views to sin taxes are that they trigger smuggling and black markets. Critics argue that it discriminates against the lower classes. Sin taxes fail to affect consumers’ behaviors.
Critics also argue that the behavior affected by sin taxes are strictly personal and of no social consequence, and therefore should not be moderated by the government. Not all research supports the idea that all alcohol and tobacco consumers financially burden society. The health care system would become too dependent on the success of the increased taxes. If alcohol and tobacco are, viewed as sinful products, how can the success of the increased taxes continue to pay for health care reform if millions abstain from these harmful products?
Insured consumers of alcohol and tobacco already pay higher premiums. This appears to be double taxation. In support for sin tax, some argue tobacco and alcohol behaviors are immoral. By, raising the cost for certain products, they aim to force change upon people’s behavior. Consumption of alcohol and tobacco has, been linked to a variety of medical problems. In the United States alone, hundreds of thousands die annually from smoking tobacco. By making the cost of unhealthy behavior prohibitive, they hope to produce a healthier society.
The medical argument is that the consumers of immoral products cause a greater financial burden on society by forcing others to pay for medical treatment of conditions stemming from such consumption. There are warranted arguments for the justification and oppositions of “Sin Taxes ? , but there does not appear to be sufficient evidence, that alcohol and tobacco alone account for the ever, increasing cost of health care. Furthermore, there are those who argue that high increases in sin taxes would do little to deter the use of alcohol and tobacco, therefore having no benefits to society.
Abnormally high increased taxation of the tobacco industry and the distilleries would have a profound adverse effect on the economy. If these industries have their bottom lines cut, that would force lay-offs of thousands of people thus undermining the purpose of the increased sin taxes. In the United States new “Sin Taxes ? have been proposed to help pay for the trillions of dollars needed to finance the health care reform over the next ten years. Economists will need to research the justifications of these new taxes.
“President Obama has made a firm pledge that the health care overhaul must be deficit-neutral, but relative to current law, the current proposal would probably generate substantial increases in Federal budget deficits during the decade beyond the current 10-year budget window ?. USA Today Magazine. (2009 Nov). Vol. 138 issue 2774, p8-9 2p. The authors position remains,Sin Taxes ? should, be increased to pay for health care reform. However, there needs to be strict guidelines that the increase in taxes will be, used for the express purpose of paying for health care mandates. If the United States, passes the law for an increase in “sin taxes ?
to pave the way for health care reform, than we should take heed from the Philippines and allocate a high percentage of the revenues towards the reform efforts. In addition, consideration needs to be given to the alcohol and tobacco industries. It is highly doubtful that alcohol and tobacco will ever be illegal. Therefore, we must protect the rights of employees of said industries and thus protecting the economy of the United States. The opposing views of the justification of increasing “Sin Taxes ? to pay for health care reform has not been enough to alter this author’s position. Bibliography :
Antiporda, J. (2012, 19 Sep) . Single “sin tax ? rate to drag down govt. revenue targets. The McClatchy-Tribune Business News. Retrieved from http://search. proquest. com. proxy- library. ashford. edu/docview/1040867522/13C62D3B79B ¦ Dorsey, R. (fall 2010). In Defense of “Sin Taxes ? Southern Law Journal 20 p 53-67 Retrieved from http://search. proquest. com. proxy-ashford. edu/docview815768595/13C5061 DE5C35 Green, R. (Jan. /Feb. 2011) Ethics of “Sin Taxes ? Public Health Nursing 2. 1. 6. 1 Retrieved from http://search. proqest. com. proxy-ashford. edu/dicview37423234/13C62D8CA217E
Otero, J. Banking on Sin Washington Times (Oct. 25, 2011) Retrieved from http:// www. washingtontimes. com/news/2011/oct/26/banking-on-sin-states-profit-as-taxes-rise (Jan. 1, 2013) “Higher Sin Taxes Take Effect Today ? Headline News, The Philippines Retrieved from http://www. philstar. com/headlines/2013/01/892045/higher-sin-taxes- take- effect-today (Nov. 2009), “New Taxes to Pay for Health Care Reform. ? USA Today Magazine. Retrieved from http://web. ebscohost. com. proxy-libraryashford. edu/ehost? vid+4&sid=a6e8c5b2- [email protected]&hid=125&bdata=JWF1dGhU