Rather than tax sin, why not simply require higher minimum prices?

[Viking Prince]

Gvernments have what are referred to as "sin" taxes. Because we disapprove of a practice such as cigarette smoking or dinking booze, we allow the government to collect additional monies by taxing consumption of these items more than we would tax approved practices such as buying ans wearing a new shirt.
This situation creates a somewhat imoral relationship between government spending and sin. The government is using the sin of citizens to fund government services and thus has an incentive to continue the practices to continue the cash flow.

Many argue that such taxes to discourage consumption is a much better method to simply prohibiting the consumption since that process does not work in any practical sense. Drug dealing is a good current example of the failure of prohibition.

The BBC (Plans for minimum alcohol price ) recently reported that the UK government is considering a required minimum price for booze. Rather than tax to raise the price and in theory reduce consumption, the idea is to simply require a higher minimum price to reduce consumption. This reduces any linkage between a government profiting from the continued consumtion through tax revenues.

What are your thoughts on this?

[Junius]

I don't see how an increased minimum price for such goods (alcohol in this case) would be received any differently from an increase in excise duty. In fact the only difference I can see is that the money spent on alcohol will be going to the retailer, and distributed among their shareholders as profit, instead of into government schemes which benefit society as a whole. Excise duty is an important revenue raising mechanism for the government, and if they can get money from that channel, they'll have to increase taxes or borrowing anyway, leading to a worse off position for the general public.

[Da Skinna]

People would find a way then. It sounds like Prohibition almost... raising an item above the reach of the many masses can lead to underground markets, basement distilleries, and higher crime.

Can we tax political corruption? I mean, if we're going to tax sins here why not...

[Kiljan Arslan]

I support sin taxes for the fact that it gets the support of the moralists and it raises money.

[Akhil_The_Great]

I rather see money go to the government as revenue rather then extra profit for corporations,

[C-Rob]

Akhil... I don't trust money in either hands.

OP, raising the price wouldn't do anything but make dead-beat parents spend more on it and even LESS on their children, decreasing the amount of taxes that are collected that could maybe do something useful, and giving grocery, alcohol producers, and liquor stores more profit. I think it benefits the well-to-do and shoves a foot up the butt of everyone else.

[Каие]

I support the minimum alcohol price. Alcohol abuse is rampant in the UK, especially amongst my generation. It's wasting police time and giving the authorities excuses for CCTV all over the damn place.

[Junius]

Alcohol abuse isn't down to the cost of the alcohol. Look at France, where there is an abudant supply of cheap alcohol. Abuse levels, especially abuse to the point of binge drinking, is rare. It is their culture of maturity and responsiblity towards alcohol that makes it less of a problem. Governments like to increase taxes on alcohol since it is easy to justify, will bring in large amounts of revenue, and because of alcohol's inelasticity. If Governments really wanted to do something to stem alcohol abuse, they would increase spending of education and promoting responsible drinking, monitered b guardians, from a much earlier age. As it stands now, teenagers, and i speak from experience, cannot enjoy alcohol in the safe confines of their home, and instead go out into a field and binge drink. General attitude changes must be promoted, and price rises will not discourage the rampant alcohol abuse present today.

[Каие]

Good luck changing the attitudes of the British towards drinking mate. Especially up north. I've said this before, I understand drinking in a pub with your mates, but I don't understand going somewhere with the intention of getting rat arsed, being sick and dying for a few hours the next morning. The former require no adjustment, the latter will be near impossible to change the attitude of.

[Junius]

I never said it would be easy, as the Empire loading screen once told me:

What two ideas are more inseparable than Beer and Britannia?

I did, however, say that, in the long run, it would be the more effective policy, which would not get implemented any time soon, as it's results would not be felt in the short run, and it is just easier to raise taxes than to spend them.

[Каие]

Where would you get the money to do that from? As for it to have any effect it has to be extensive and enormous, thus expensive.

[Zhangir]

High minimum price creates no revenue for the state to pay for Welfare state
High minimum price will be above the market equilibrium, thereby demand outstripping supply, creating a black market/hidden economy or queues.

Two simple reasons why Taxes are better.

[Каие]

High minimum price creates no revenue for the state to pay for Welfare state

Higher price/prfits = more tax.

[Junius]

I am not arguing that it would be cheap and easy, and yes it would take a long time, and would have to be very broad in it's approach. The money would be borrowed of course, since it really makes more sense to do that. It isn't anything that'll happen soon, or maybe at all, but I still think it would be better than annual rises in excise duty.

Higher Profit = Higher Taxes, well, maybe, but if it were taxed directly (even though it is an indirect tax, but you get what I mean) then all, say 20p of tax on alcohol would go into the government coffers, instead of the 10% of 20p going to the government in profit taxation. And surely there would be a decrease in demand, since costs are higher, and an increase in supply, since markets want to sell more at higher prices. The demand would be driven underground, if it were easier or cheaper, to get alcohol through those methods. This isn't even approaching the type of problems prohibition would introduce, though.

[Каие]

I don't think we should borrow money to embark on a quest to reverse centuries of drink culture. The only way this broad programme could work if alcohol is taxed and the revenue is used to pay for the education programme. Like the congestion charge.

[Junius]

Borrowing for highly expensive schemes, the effects of which are felt over a period of years, is an accepted and fairer way of paying for those things. It would spread the cost out, through the repayments that would have to be made, to the people who feel the positive effects of the scheme, instead of burdening one year of tax payers with the cost, who might not necessarily gain the benefits of it.

[Zhangir]

Higher price/prfits = more tax.

not necesserily if its a minimum price, as opposed to high Unit Tax.

As well as let me add, that alcohol is very inelastic in Demand and will be consumed in similar quantities, even at a larger proportion of the price raise.

So whatever you do, people will still drink.
Inelastic Price Elasticity of Demand

[BNS]

Higher price/prfits = more tax.

Not necessarily, a decrease consumption as the government hopes for, would offset any more profit. Unless alcohol is really that inelastic (all the more incentive for black market activity). Either way this will hurt the economy as it disrupts the efficiency of the market, people who buy alcohol now have less money to spend or invest on other areas of the economy, this sends a mini negative ripple across the economy. (less growth and job creation)

Seriously, Brits stop voting in such shortsighted controlling politicians.

[Bovril]

You've got wonder which genius of a drinks industry lobyist came up with this one.

[BNS]

You've got wonder which genius of a drinks industry lobyist came up with this one.

Why would it be a drinks lobbyist push for this, it is not economically wise. By the apparent lack of of economic knowledge or concern this stinks of bureaucracy.