Adam Smith Institute

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Against sin taxes

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against-sin-taxes

Free societies are those in which government minimizes its intrusion into the lives of its citizens, intervening only to protect individual liberty. Such government makes no effort to use the force of law to impose upon individuals whatever system of values or concepts of morality it may happen to espouse. The British public is generally accepting of this doctrine of non-interventionism, most perceptibly in areas of civil liberties; the swarm of criticism of the recent French law restricting the Islamic niqab, along with Damian Green’s prompt rejection of such an “un-British” law in the United Kingdom, is merely one example of the persistent acceptance of diversity of belief and expression in this nation.

Yet even in the United Kingdom, such tolerance has stiff limits. It does not extend to economic freedoms, as the government regularly pushes us to live our lives in a manner more amenable to the opinions and beliefs of the majority. The British government accomplish this sly form of paternalistic regulation through the imposition of a number of sumptuary taxes that seek to discourage the purchase and consumption of goods that society considers to be undesirable, such as alcohol and tobacco products. The taxes are a popular way to raise revenue, as they are targeted at behaviour considered either unhealthy or otherwise disapproved of by the majority of the public.

While the ability to raise revenue and simultaneously achieve some communal goal such as improved public health may be appealing, sin taxes must be recognized as the social engineering projects that they are. Governments should not seek to discourage or encourage any activity, save for those activities that interfere with the rights of other individuals. If an individual voluntarily chooses to engage in a non-offensive activity, such as enjoying a glass of wine, the government should respect their preferences and refrain from “nudging” (or, after Alistair Darling’s 2008 dramatic sin tax hike, “shoving”) the individual to make a decision desired by the state. Writing a tax code that discourages the consumption of a particular good based on the sole virtue that one is considered “undesirable” is a dangerous step for any society to take, as it imposes communal values upon the individual. In the United States, for example, the discussion of sin taxes has gradually extended from alcohol and tobacco to dietary habits and pornography.

It would be quite controversial for the government to levy a special tax on the sale of the niqab, in order to discourage its use. Similar resistance to behavioural revision should be applied to sumptuary taxes on alcohol and tobacco, as well.