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A sin tax is an excise tax specifically levied on certain goods deemed harmful to society, for example alcohol and tobacco, candies, drugs, soft drinks, fast foods, coffee, and gambling. Two purposes are usually used to argue for such taxes. In contrast to pigovian taxes, which are to pay for the damage to society caused by these goods, sin taxes are used to increase the price in an effort to reduce their use. Increasing a sin tax is often more popular than increasing other taxes.

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  • A sin tax is an excise tax specifically levied on certain goods deemed harmful to society, for example alcohol and tobacco, candies, drugs, soft drinks, fast foods, coffee, and gambling. Two purposes are usually used to argue for such taxes. In contrast to pigovian taxes, which are to pay for the damage to society caused by these goods, sin taxes are used to increase the price in an effort to reduce their use. Increasing a sin tax is often more popular than increasing other taxes.
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