Some officials and many citizens see taxation as the most effective way to deter behavior that is inimical to the individual or society. Others see any form of “sin tax” as overreach, an annoying intrusion by the “nanny state.”

Depending on location, a sin tax might be levied on alcohol, tobacco, casino gambling, the lottery, video gaming, horse racing, and now cannabis. According to Governing.com:

While they’re not a major source of revenue in most states, some do rely on them much more than others. Sin taxes account for the largest share of tax revenues in Rhode Island, Nevada, West Virginia, New Hampshire and Delaware.

The public can be inveigled into believing that other burdens, like property tax or sales tax on non-sinful consumables, might be lifted. All they have to do is accept the idea that a sin tax can be any exorbitant amount whatsoever, like more than 50% in some cases.

Still, looked at purely as a revenue-generating apparatus, the schemes rarely play out as advertised. As a bureaucrat or a corporate representative might phrase it, and as a spokesperson for the Illinois Beverage Association actually did say, “These models consistently conflict with real-world results.”

In one recent year, tobacco tax brought in almost $17 billion nationwide. As the old joke almost goes, “A billion here, a billion there, and pretty soon you’re talking about real money.” All kidding aside, sin taxes pay for a lot of public good. Unless they don’t.

Plans go awry

In Cuyahoga County, Ohio, a news story began:

You’ve been paying a sin tax in Cuyahoga County since 1990. And you’ll be paying it for at least another 19 years…

The county’s sin tax covers alcohol and tobacco, and brings in maybe $13 million per year, which legally has to be spent on professional sports facilities, and only for capital repairs costing more than half a million dollars. Apparently, this intention has been carried out in a straightforward manner, with the money “used toward construction of the Q, Progressive Field and the plaza between the two facilities.”

The author of the article Karen Farkas goes on to say:

Cuyahoga County taxpayers still are paying millions of dollars a year for the facilities because of cost overruns and team leases that have failed to generate as much money as originally promised.

Also, various issues around the whole project continue to cause dissent in the community.
When a “sin tax” is proposed, the public can be convinced to vote for it on the promise that revenues will go into a certain budget column, often the one headed “public schools.”

When Boulder, Colorado, discussed instituting a soda tax, voters were told that revenues would go to support public health, “particularly programming that targets kids and minorities, who are disproportionately burdened by diabetes and obesity.” But a group of citizens balked at the general nature of that promise, wanting first to know specifically what programs would be funded when the tax money started rolling in. The City Council said, no, let’s pass the thing first, then we will put together a task force to make recommendations about how to spend it.

Your responses and feedback are welcome!

Source: “Illinois soda tax could cut health costs, raise $561 million in revenue annually,” ChicagoTribune.com, 04/25/17
Source: “Sin Tax Revenues by State,” Governing.com, 2014
Source: “What is Cuyahoga County’s sin tax and what does it pay for? 8 questions and answers,” Cleveland.com, 12/12/16
Source: “Harvard: Sugary drink tax would cut disease rates, health care costs in Boulder,” DailyCamera.com, 10/27/16
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