Snowdon: the real price of 'sin taxes'

Chris Snowdon has a new report out today.

The Wages of Sin Taxes: The True Cost of Taxing Alcohol, Tobacco and Other 'Vices' is published by the Adam Smith Institute.

It argues that so-called 'sin taxes' on cigarettes and alcohol are designed to boost revenue, not improve public health; minimum alcohol pricing will exacerbate poverty and entrench inequality without discouraging binge drinking; and most of the costs of drinking and smoking fall on individual consumers, not the public.

Says Chris:

"Campaigners for sin taxes and minimum pricing often claim that 'healthy citizens' are forced to bear the cost of other people’s lifestyles. In fact, the evidence shows that smokers take less from the communal pot than the average Briton and the money raised from alcohol duty comfortably pays for any burden drinking places on public services. If the aim of policy is to make individuals pay their way, the government should slash the beer tax and subsidise cigarettes.

"We are not seriously suggesting the government does this, but if politicians insist on increasing taxes on these products, they should admit that the purpose is to raise revenue. Essentially the government is forcing the people who are least likely to live to extreme old age to pay for the escalating costs of an ageing population.

"As we show in the report, amongst EU countries there is no relationship between alcohol prices and alcohol related harm, nor is there an association between cigarette prices and smoking rates. The only significant effects that sin taxes have are to make the poor poorer and black marketeers richer.”

In a week in which the Scottish Government has announced plans to introduce a minimum price per unit of alcohol, Chris's report could not be more topical.

For further information click here.

See also: The wages of sin taxes (Velvet Glove Iron Fist)

Comments

[c777]

They just want the tax to keep their unsustainable big government gravy train on the tracks.
Their running out of net taxpayers due to their ruinous policies of the last 30 years.
Bad news guys,here comes Greece,Spain,Italy,Portugal.
Your gravy train and cushy numbers are over as well as your established political parties cosying up to the vested interests rather than those you are supposed to represent.
The dustbin of history awaits you,head first.

[Misty]

On question which I’ve yet to come to a definite conclusion about over all this minimum-pricing malarkey is: why are the Government going for minimum pricing on alcohol, rather than (as they have done year in and year out on cigarettes) simply going for increasing levels of taxation? Surely, by bringing in minimum pricing they’ll just be making their potential opponents – the breweries and alcoholic drink manufacturers – more wealthy, and thus more powerful. The only conclusions that I, as a time-hardened sceptic can come to is:

1. That the “minimum” price only applies to end-point sales, i.e. those direct to consumers; any difference between the cost-price to suppliers and the stated “minimum” must be handed straight to the Government – thus rendering it as, effectively, a Stealth Tax under another name.

2. That the Government knows that, being big-time boozers and not wanting to lose even part of the benefit of their subsidised bar prices, the majority of politicians aren’t really behind this move and thus are hoping that, by making booze makers more wealthy, they’ll be in a better position to argue against severe restrictions on drinking, thus preventing the Government from doing the things which they say they want to do to curb problem drinking, but don’t really want to.

3. That the tax on booze is charged as a percentage of the retail price of it, i.e. the more expensive the drink, the more tax is collected. Ergo, a “minimum price” of a drink would mean a “minimum tax” on each one, too.

4. That the Government has had its fingers burned by ever-increasing taxation on tobacco products, which has left them financially very heavily dependent on a group of people continuing to undertake an activity which – were it not for the financial consequences – they would dearly love to ban outright. Having got themselves neatly into that rather awkward cleft stick, they are now reluctant to repeat the same mistake with their latest favourite “health hobby-horse.”

Anybody on here able to enlighten me as to which (if any) of the above scenarios is the correct one or, if none, what the correct one is?