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Tough times call for tough measures. Now, states with cash flow problems are putting on their thinking caps and inventing new ways to capitalize on revenue opportunities.
One such proposed plan is based on lessons in morality. A ‘sin tax’ has been brewing ideas for collecting taxes on the vices of the general public. Here is a look at the current state of such imposed sin taxes in a number of states around the country.
- 25 states have been capitalizing on sanctioned gambling establishments by either introducing new facilities or expanding existing ones.
- 22 states have increased their taxes on tobacco products in the last year, including South Carolina, which has had a small $.07 tax in place for more than 30 years.
- 7 states have imposed new taxes on alcohol or raised the tax on existing prices.
- 3 states have contemplated a ‘pole tax’ which would be incurred by patrons of pornography, strip clubs and the services of escort. (Pennsylvania, Georgia, Texas).
- Several states including Colorado, Washington and New York have considered instituting taxes on the sale of candy and soda products.
- Nevada’s State Senate has considered taxing and further legalizing prostitution.
- California’s government has been pursued by advocates of legalized marijuana and the potential for the revenue sales tax on pot would bring in.
Will the Sin Tax Work?
Experts believe that the only way to raise more revenue is to raise income taxes and many feel that taxing people who have vices is fair play. On the other hand, back during the Great Depression, the Prohibition did not necessarily decrease the amount of drinking people did but there was a significant increase in the participation of unlawful activities. Prohibition ended when new jobs needed to be created and revenue from sales tax was needed.
Sin taxes may not change how Americans operate, especially since the tax amount will not likely be very noticeable. The demand for cigarettes and soda will keep people buying despite an increase in taxes. Essentially, if consumers are willing to pay, there is definitely revenue to be generated.
While there is little possibility of the plan backfiring, if taxes become so high that they force people to stop eating junk food and drinking alcohol, the States will suffer even more by a loss of revenue from product sales. Furthermore, the manufacturers of these products may be forced to cut back their work forces, thus raising unemployment. The financial troubles of many states in the country have forced the hands of State officials who now need to prioritize and consider other options for balancing the budget, even if it means pursuing those with vices who wouldn’t mind pay just a little more for something they have to have.
Readers: Do you think the so-called “sin tax” is a wise way for state governments to raise more money? Why or why not?