Do 'sin taxes' curb harmful behavior?

The Ohio Capital Journal reports that Ohio Gov. Mike DeWine is proposing to create a child tax credit and to pay for it with increased “sin taxes” on tobacco. According to one analysis, the tax credit is expected to produce big gains for the state. 

Economists overwhelmingly agree on a second benefit — that taxes themselves on things like tobacco, gambling, and marijuana can reduce harmful behaviors, according to a survey of economists that was released on Tuesday. However, they said, those taxes would fall most heavily on the group that DeWine’s tax credit is meant to help — the poor.

According to one analysis, the tax credit is expected to produce big gains for the state. Economists overwhelmingly agree on a second benefit — that taxes themselves on things like tobacco, gambling, and marijuana can reduce harmful behaviors, according to a survey of economists that was released on Tuesday. However, they said, those taxes would fall most heavily on the group that DeWine’s tax credit is meant to help — the poor.

Michael Jones, PhD, associate professor of economics at UC, was quoted in the Ohio Capital Journal and offers additional thoughts about ‘sin taxes.’

"Tobacco taxes alone won’t eliminate smoking, but they are a critical tool in a larger strategy that includes prohibitions on smoking in public places and increasing education on the dangers of smoking,” says Jones. "One of the reasons sin taxes work is that younger smokers are somewhat price-sensitive—when cigarettes cost more, they’re less likely to start or continue smoking.

"The argument that sin taxes are regressive is valid in that lower-income people spend a higher percentage of their income on them, but over time, they also benefit the most from quitting,” says Jones. "Even when people can access cheaper cigarettes across state lines, higher tobacco taxes still lead to fewer people picking up the habit and more people quitting."

Read the article in Ohio Capital Journal online.

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