Sin taxes are less efficient than they look

Sin taxes are less efficient than they look

Very interesting piece on the pros and cons of sin taxes (taxes on things like tobacco, alcohol).

Implied, but not quite explicitly mentioned here, is the fact that because such items tend to have low price elasticity of demand (in other words, price rises don’t change consumption habits all that much) — because they are usually addictive. As such, they are excellent revenue generators for governments.

This is an issue that’s well worth being on top of, as such taxes increasingly cover new things — like sugar and plastic bags.


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