“Sin” taxes—eg, on tobacco—are less efficient than they look

TOBACCO was new to England in the 17th century, but even then, smoking had plenty of critics. The most famous was King James I, who in 1604 described smoking as “a custome lothsome to the eye, hatefull to the Nose, harmful to the braine, dangerous to the Lungs, and in the blacke and stinking fume thereof, nearest resembling the Stigian smoke of the pit that is bottomless”. The king increased the import tax on the “noxious weed” by 4,000%.

Sometimes, governments have had compelling financial reasons to tax particular goods. In 1764, when the national finances were drained by wars in North America, Britain’s parliament began enforcing tariffs on sugar and molasses imported from outside the empire. In practice, these served as a consumption tax on colonists living in America and threatened to ruin their rum industry. Not long after, parliament also introduced heavy levies on tea. The colonists were not best pleased.

Two-and-a-half centuries later, sugar taxes have returned to policy…

Link to article: www.economist.com/news/international/21746895-they-do-help-improve-public-health-sin-taxeseg-tobaccoare-less-efficient-they?fsrc=rss%7Cint


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