TLP: Sinning for a Good Cause
In the continuing effort of governments everywhere to wring every last dollar, pound, euro and ruble out of their people, the Russians may be doing it right.
Catherine Rampell examines the issue in the NYT:
A few months ago, I wrote about increasing popularity of sin taxes, which many states were levying or at the very least increasing in order to scrape together more money.Of course, if you drink and smoke enough, the beneficence runs two ways.
The rationale behind sin taxes (like their close relative, Pigouvian taxes) is two-pronged. One, the taxes help governments raise money. Two, the taxes also discourage “sinful” behaviors, which makes the policies easy to sell to a morally concerned public.
The problem is that to some extent these objectives are at odds; if sin taxes are successful at discouraging “sinful” behavior, they won’t actually contribute much additional tax revenue.
Russia’s finance minister, Alexei Kudrin, seems to have found the magic bullet: Encourage the sin while you tax it. The Telegraph reports:Speaking as the Russian government announces plan to raise duty on alcohol and cigarettes, Alexei Kudrin said that by smoking a pack, “you are giving more to help solve social problems such as boosting demographics, developing other social services and upholding birth rates”.
“People should understand: Those who drink, those who smoke are doing more to help the state,” he told the Interfax news agency.