The incidence of sin taxes

We show that the burden of sin taxes does not necessarily fall most heavily on individuals with the highest level of consumption and derive a condition for cases where sin taxes improve individual welfare. We further argue that taxes on goods such as unhealthy food can be progressive when consumers...

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Bibliographic Details
Published in:Economics letters 2008, Vol.98 (1), p.95-99
Main Author: Kotakorpi, Kaisa
Format: Article
Language:English
Subjects:
Consumer behaviour
Fiscal theory
Preferences
Self-control
Tax incidence
Tax systems
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Summary:We show that the burden of sin taxes does not necessarily fall most heavily on individuals with the highest level of consumption and derive a condition for cases where sin taxes improve individual welfare. We further argue that taxes on goods such as unhealthy food can be progressive when consumers have time-inconsistent preferences.
ISSN:0165-1765
1873-7374
DOI:10.1016/j.econlet.2007.04.012