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Sin Taxes, Why Governments Tax Sin and Whether They Work

id : 91 Tax Policy   
posted by : Admin
 DOQ : 2020-05-22 07:22:32
   Admin
  
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What is sin tax?

Sin tax is levied to discourage people from consuming goods or services such as tobacco and alcohol that are harmful to society. It serves two purposes:

i) Make the specific goods expensive, so much so that consumers are forced to not consume them

ii) Collect higher taxes from industries that produce such goods and use it to fund welfare expenditure.

Governments of various economies have resorted to levying sin tax to make consumers of harmful products liable for their actions. They have gone a step ahead and added other products in addition to alcohol and cigarettes to the list of sin goods. For instance, the Canadian, UK, and Swedish governments consider lotteries, fuel, and gambling as sin goods. Mexico has a soda tax and the UK is considering a sugar tax to fight obesity.


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