University of Arkansas System
Type of paper: Thesis/Dissertation Chapter
Tax the Sin to Save the Sinner
Surely no one would doubt that alcohol and tobacco are being consumed in huge quantities all around the world. It is particularly true in developing countries such as my home country of Vietnam and its neighbors with tobacco and alcohol. Along with this consumption, many health and social problems exist, affecting many millions of people planet wide. The United States is a country already plagued by health and social problems and many are due to excessive drinking and smoking. So, the question becomes, “Should taxes on alcohol and tobacco be increased to help pay for medical costs?” This paper will identify many of the medical problems with drinking and smoking, the social problems from the same, and provide some perspective on the current taxes of these products and how those taxes are utilized. In the USA today, taxes of the alcohol and tobacco products are bundled into the prices of the products and therefore customers do not know the cost of the product vs. the taxes included in the sale.
Even though the US Federal government first levied taxes on tobacco in 1794, by 1864, the tax for a pack of 20 cigarettes was still less than 1 cent. By 2009 this had been slowly raised to $1.01. Inflation adjusted this means that the taxes on a pack of cigarettes went up roughly 10 fold over nearly 150 years. However, tobacco products are also by the individual states and cities. In 2009, South Carolina and Rhode Island taxed them at 7 cents and $3.46 per pack, respectively. Like tobacco, alcohol (including spirits, wine, and beer) is taxed at different rates by not only the federal but also state governments. In 2008, the federal excise tax rates proof gallon of spirits and 31-gallon barrel of beer were $13.50 and $18, respectively. Additionally, depending on the percentage of alcohol content, the federal excise tax in this year was $1.07 to $3.15 per gallon of wine. Again, states also set their own tax rates for each type of alcohol.
In 2009, for spirits, Maryland and Washington kept respectively the lowest and highest tax rates at $1.50 and $26.45 per gallon. In the case of wine, the lowest and highest tax rate in 2009 were 11 cents and $2.50 per gallon in Louisiana and Alaska. In that same year, Alaska had the highest tax rate for beer of $1.07 per gallon and in Wyoming beer was taxed at a low of 1.9 cents per gallon. Taxes on alcohol and tobacco are often referred to as “sin taxes”. They are considered surcharges taxed by federal and state governments on products concerned by lawmakers, leading to the high cost of these products such as wine, cigarettes, beer, and spirit. On January 24, 2003, to control the tobacco and alcohol consumption, the federal Alcohol and Tobacco Tax and Trade Bureau was created and tasked with being responsible for levying and collecting these taxes.
In the United States, federal and governments impose significant “sin taxes” on alcohol and tobacco products. More specifically, alcohol and tobacco products such as wine, beer, spirit, cigarettes and chewing tobacco suffer the highest individual product tax rate at the state level. These products are taken into the account because these kinds of drink contain many substances linked to or directly causing lots of diseases, or other social harms such as drunk driving. Alcohol and tobacco taxes are considered as sin taxes because the federal and local governments intend to discourage the excessive consumption of these products which may lead to various problems for not only the customers but also the society such as the health effects of alcohol consumption, the social and economic problems that are linked to alcohol and tobacco use, and the effect to other people by consuming alcohol and tobacco products.
The first problem supporting the issue that taxes on alcohol and tobacco should be increased to help pay for rising medical costs is that tobacco and alcohol products will bring the severe damage for the health of the consumers. Containing many toxic substances such as carcinogens, benzene, formaldehyde, sucrose octaacetate, and even denatonium benzoate, the products of tobacco and alcohol lead lots of diseases destroying the health of consumers or even killing them. Many diseases are completely caused by alcohol such as alcohol dependence, alcoholic liver cirrhosis and or highly linked to others such as some cancers (including lip, tongue, throat, liver, and breast cancer). Moreover, alcohol also increases the risk of diseases of the heart and blood vessels. There are many diseases directly linked to tobacco products such as heart disease, stroke and lung , mouth, lip, gum, and even prostate cancer. In addition, tobacco products are blamed for roughly 80% of all lung cancer deaths and 20% of all cancer deaths overall.
Smoking has also been considered as the factor leading to cancers of the mouth, bladder, kidney, stomach and cervix and to a variety of other health problems such as diabetes, peptic ulcers, vision problems, and back pain. Next, there are many social and economic problems linked to alcohol and tobacco use. The sin taxes of the federal and local government lead to the high price of tobacco and alcohol products. Therefore, consumers of these products will spend much more money than the real cost so that they will face to economic burden. The economic consequences of alcohol and tobacco consumption can be even more severe because of not only the amount spent on drinks or smoking but also the lost wages, and medical and other expenses for alcohol effect. Besides, in the working environment, alcohol consumption can cause to absences and lower performance, leading to unemployment. Alcohol also causes many social problems such as auto accidents and violence between husbands and wives.
Lastly, alcohol and tobacco products may not only affect those who drink but also those around them. In fact, drinking can lead a person to be more violent and aggressive, leading to the violence between drunks and others. Besides, alcoholics usually spend more time away from home, leave other family members destitute, or cause them anxiety, fear, and depression. Physical or psychological effects can be left on children as an effect of parental drinking. In addition, smoking not only annoys other people but also leaves them as the passive smokers. Similar to smokers, passive smoker can suffer some serious diseases such as heart disease or lung cancer. Juvenile passive smokers (children of smoking parents) suffer higher rates of ear infections (nearly 5%) and hospitalizations with ear infections (nearly 10%) than their non-smoking parent peers.
Additionally, passive child smokers were 2.5 times more likely to develop asthma than children of non-smoking parents. Pregnant passive smokers are also more likely to have under weight babies. In conclusion, whatever a high number of studies showing medical and social negative impacts of excess alcohol and tobacco use, the raising of sin taxes may cause the exact amount of to be exposed, but in fairness to the non-smokers, these increases are justified given the impacts. Raising alcohol and tobacco sin taxes will accomplish several social goals—funding of the medical impact as more medical care is carried by the government and others, the inevitable reduction in the use and abuse of these products which will lower the medical costs, until in the end, the two meet such that smokers and drinkers self-fund their social impact.
Hendrix, B., (2011, Jan 28). Second Hand Smoke Raises Kids’ Ear Infection Risk. WebMD Health News. Retrieved from