Tuesday, September 28, 2010

Drink and Smoke - Help our Economy

Catherine Rampell writes about "Sin Taxes" in her article Sin, The Hot New Government Revenue Strategy, taxes which impose extra fees "...on companies that pollute the environment or create excess social costs, called negative externalities, through business practices."

She argues that yes, even though these taxes do raise money for a government or state with financial problems, it is "two-pronged", meaning that if the tax is too effective in stopping -for example- smoking cigarettes -which everyone can agree produces ill effects- most people will in turn just stop smoking, therefore making the tax useless since no one is buying the product that has been taxed. I agree with this comments and the reasons are logical, but it's just common sense. Sin Taxes are a much better option than an out-right ban on the product (much like prohibition, and we all know how that turned out) but it has to be applied with discretion.

An argument like this has a large target audience, just because of the two things being talked about, Taxes and mainly smoking. Anyone interested in what they're government is charging them taxes on is most likely a tax-payer themselves, and the other audience would be the smokers and/or drinkers. In terms of age anyone smoking (legally anyway) is 17 or older and 21 for drinking, from these ages on-ward there's really no limit to who might be interested in this subject.

As far as credibility she links a few sources to other articles of the same topic which in turn have more evidence to prove what they're discussing. While "sin taxes" might not work for every instance -such as taxes on "fat foods"- it most likely will work in increasing revenue for the state in which it is enacted. Her arguments stands, these taxes do work, when applied discretely, meaning don't over-tax cigarettes and make people stop smoking, it'll kill the whole purpose of the tax.

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