Commentary: Twinkies, Smokes, and Fries: The Fallacies of Sin Taxes

Commentary: Twinkies, Smokes, and Fries: The Fallacies of Sin Taxes
September 1, 2006

The search for government revenue in fiscally tight times tempts legislators to raise revenue by imposing unusually high excise taxes on cigarettes, liquor, gambling, and so on. Recently, we've seen new and creative measures aimed at fatty snacks, fast food, and soft drinks--proposals familiarly known as "Twinkie" taxes.

This type of charge, often called a "sin tax," appeals to voters who view them as a way of discouraging consumption of certain objectionable products. Yet the temptation to impose sin taxes is one that should be resisted for both economic and moral reasons.

The consequences of a sin tax are often the very opposite of those intended by its designers. Rather than increasing revenue, the sin tax can reduce it. Rather than discouraging what are regarded as morally questionable behaviors, the sin tax can make them more appealing. Rather than reducing what are perceived to be internal costs of the behavior in question, the sin tax can increase them and expand them to society as a whole.



People Pushing Back

Sometimes society pushes back. Last year, Detroit Mayor Kwame Kilpatrick proposed a 2 percent tax on sales at fast-food restaurants to help close a $300 million budget deficit. The tax would have been added to an existing 6 percent city tax on restaurants. Detroit residents howled, and the mayor's new sin tax proposal wilted like a soggy, cold French fry.

Tobacco taxes are perhaps the most familiar example of a sin tax today. Taxes on cigarettes and other tobacco products have spurred a seemingly unlimited appetite for new revenue by government officials. A November ballot measure in California calls for a 300 percent increase in the state's tobacco tax.

While it is true these taxes are promoted as a means of reducing or stamping out smoking, state officials are eager to reap a boon in new revenue from smokers who simply won't be deterred by the government.

California's tax increase would create the highest levy on cigarettes in the nation. Proposition 86, as it is known, would increase the tax on cigarettes to $3.47 a pack from the current 87 cents. If passed, the average price of a pack of cigarettes in California would rise from $4 to $6.55.

But critics point out that these onerous taxes, even when they can be proved to reduce smoking, lead to smuggling across state lines, gang activity, and hardships on smaller retailers.



Confusing Vice and Crime

Sin taxes fail to consider the crucial distinction between vice and crime. Before we empower the government with what are, effectively, pastoral responsibilities, we ought to consider fundamental issues regarding the interplay between private morality and public policy.

When the state treats a certain behavior as sinful and thus taxable, it assumes certain moral categories. It says the taxed behaviors are less morally justifiable than other forms of behaviors, and therefore more justifiably taxed. The moral reasoning behind such a tax is clearly evident. Punishing wrongdoers is among the usual lists of powers appropriate to government. What is not obvious is why the central state puts itself in the business of determining the sinfulness of certain behavior given that the taxed sins are not directly invasive of other peoples' rights.

Compare smoking and drinking, for example, with crimes against person or property. When the state declares drinking and smoking to be sins subject to added levels of taxation, it also admits these behaviors are less objectionable than theft or murder.

We don't, for example, have anything like a murder tax or a theft tax. When a citizen steals something from another person, he is not taxed; he is tried and convicted as a criminal. Neither are the sins being taxed considered violations of the civil code. Instead, the state simply taxes the behavior in an attempt to raise revenue and discourage the behavior. (And these are, of course, logically incompatible goals.)



Actions and Consequences

This is not to say the behaviors targeted by the sin tax are "victimless crimes," as many civil libertarians might be inclined to say. That phrase confuses more than it clarifies. All actions have consequences outside the individual. A person who drinks excessively victimizes his family to the extent that liquor distracts from his family life. A smoker who contracts cancer imposes sometimes terrible burdens on his family.

Even sins with no identifiable earthly victims are sometimes objectionable when judged by the eternal law. There is no such thing as an action without consequence. It is possible that certain behaviors that are not direct attacks on property or person are in need of correction--but they are not best addressed by civil authority, as St. Thomas Aquinas pointed out long ago.

The question often comes down to the means of discouraging sin, not whether the sin itself is harmful.

We must be careful not to confuse opposition to sin taxes with moral relativism. Rather the question is: Do we want to charge politicians and bureaucrats with sanctioning sins in areas that are morally ambiguous? Or should this task be left to community, family, church, and tradition--social institutions that are often more trustworthy in determining the limits of nonviolent behavior?


The Rev. Robert A. Sirico (info@acton.org) is president and co-founder of the Acton Institute for the Study of Religion and Liberty, in Grand Rapids, Michigan (http://www.acton.org).

"[T]he temptation to impose sin taxes is one that should be resisted for both economic and moral reasons."

Commentary: Twinkies, Smokes, and Fries: The Fallacies of Sin Taxes

Rev. Robert A. Sirico

The search for government revenue in fiscally tight times tempts legislators to raise revenue by imposing unusually high excise taxes on cigarettes, liquor, gambling, and so on. Recently, we've seen new and creative measures aimed at fatty snacks, fast food, and soft drinks--proposals familiarly known as "Twinkie" taxes.

This type of charge, often called a "sin tax," appeals to voters who view them as a way of discouraging consumption of certain objectionable products. Yet the temptation to impose sin taxes is one that should be resisted for both economic and moral reasons.

The consequences of a sin tax are often the very opposite of those intended by its designers. Rather than increasing revenue, the sin tax can reduce it. Rather than discouraging what are regarded as morally questionable behaviors, the sin tax can make them more appealing. Rather than reducing what are perceived to be internal costs of the behavior in question, the sin tax can increase them and expand them to society as a whole.



People Pushing Back

Sometimes society pushes back. Last year, Detroit Mayor Kwame Kilpatrick proposed a 2 percent tax on sales at fast-food restaurants to help close a $300 million budget deficit. The tax would have been added to an existing 6 percent city tax on restaurants. Detroit residents howled, and the mayor's new sin tax proposal wilted like a soggy, cold French fry.

Tobacco taxes are perhaps the most familiar example of a sin tax today. Taxes on cigarettes and other tobacco products have spurred a seemingly unlimited appetite for new revenue by government officials. A November ballot measure in California calls for a 300 percent increase in the state's tobacco tax.

While it is true these taxes are promoted as a means of reducing or stamping out smoking, state officials are eager to reap a boon in new revenue from smokers who simply won't be deterred by the government.

California's tax increase would create the highest levy on cigarettes in the nation. Proposition 86, as it is known, would increase the tax on cigarettes to $3.47 a pack from the current 87 cents. If passed, the average price of a pack of cigarettes in California would rise from $4 to $6.55.

But critics point out that these onerous taxes, even when they can be proved to reduce smoking, lead to smuggling across state lines, gang activity, and hardships on smaller retailers.



Confusing Vice and Crime

Sin taxes fail to consider the crucial distinction between vice and crime. Before we empower the government with what are, effectively, pastoral responsibilities, we ought to consider fundamental issues regarding the interplay between private morality and public policy.

When the state treats a certain behavior as sinful and thus taxable, it assumes certain moral categories. It says the taxed behaviors are less morally justifiable than other forms of behaviors, and therefore more justifiably taxed. The moral reasoning behind such a tax is clearly evident. Punishing wrongdoers is among the usual lists of powers appropriate to government. What is not obvious is why the central state puts itself in the business of determining the sinfulness of certain behavior given that the taxed sins are not directly invasive of other peoples' rights.

Compare smoking and drinking, for example, with crimes against person or property. When the state declares drinking and smoking to be sins subject to added levels of taxation, it also admits these behaviors are less objectionable than theft or murder.

We don't, for example, have anything like a murder tax or a theft tax. When a citizen steals something from another person, he is not taxed; he is tried and convicted as a criminal. Neither are the sins being taxed considered violations of the civil code. Instead, the state simply taxes the behavior in an attempt to raise revenue and discourage the behavior. (And these are, of course, logically incompatible goals.)



Actions and Consequences

This is not to say the behaviors targeted by the sin tax are "victimless crimes," as many civil libertarians might be inclined to say. That phrase confuses more than it clarifies. All actions have consequences outside the individual. A person who drinks excessively victimizes his family to the extent that liquor distracts from his family life. A smoker who contracts cancer imposes sometimes terrible burdens on his family.

Even sins with no identifiable earthly victims are sometimes objectionable when judged by the eternal law. There is no such thing as an action without consequence. It is possible that certain behaviors that are not direct attacks on property or person are in need of correction--but they are not best addressed by civil authority, as St. Thomas Aquinas pointed out long ago.

The question often comes down to the means of discouraging sin, not whether the sin itself is harmful.

We must be careful not to confuse opposition to sin taxes with moral relativism. Rather the question is: Do we want to charge politicians and bureaucrats with sanctioning sins in areas that are morally ambiguous? Or should this task be left to community, family, church, and tradition--social institutions that are often more trustworthy in determining the limits of nonviolent behavior?


The Rev. Robert A. Sirico (info@acton.org) is president and co-founder of the Acton Institute for the Study of Religion and Liberty, in Grand Rapids, Michigan (http://www.acton.org).