The use of sin taxes or fines represent a possible area for problems in the use of aversive control. Obviously, the person performing the action that is intended to be discouraged experiences a monetary loss; but the taxing or fining municipality, state, or federal government usually experiences an augmentation in the revenue stream as a by-product. This obviously provides the taxing or governing body with a stronger incentive for stricter enforcement of ordinances that are fined.
The philosophical justification for the use of fines or sin taxes is that certain actions are in se malus; and the intent in their use is to discourage those behaviors. Using that perspective, it would seem to be fitting to adopt a schedule of heavy taxation or fines to maximally discourage performing the unwanted behavior. In short, fine the Hell out of them for doing those no-no actions! Make them quit their crappy behavior!
Some examples of activities in these categories include “sin” taxes on tobacco products and alcohol and fines such as for illegal parking, prostitution, speeding or drunken driving. Late fees for paying bills and even the fines for having overdue library books are other minor examples.
It is my contention that in a few cases municipalities might become unwittingly caught on the horns of a dilemma: having to balance two possible consequences:
By levying heavy, severely punitive fines, the agency (a) maximizes the likelihood that an undesired will be seen less often, and become less of a problem. However, the agency may in a few cases be dependent on the collection of fines as part of its revenue stream. This will increasingly motivate the agency towards stringent enforcement; however, if the likelihood of being caught and the severity of punishment are both very high, (b) the potential miscreants will be less likely to offend. And the fine revenues will diminish pretty soon.
Let's take a simple example: Suppose the present tax on a package of cigarettes went from 62 cents (rate for Tennessee; national average:$1.46) to $10 a pack. This would price licit cigarettes beyond what a heavy smoker could afford: a two pack per day person would forfeit $7300 per year in taxes! The chronic smoker would thus be confronted between the legal option, abstinence, and the unlawful ones: theft or bootleg cigarettes. The law-abiding smoker would have to stop.
Therefore, any official imposition of fines should at least be implicitly accompanied by an understanding of which goal has become more important: Is the fine or tax now still seen as primarily to discourage the action, or has it become primarily a means to generate revenue? If the former, then it would be appropriate to use very heavy fines or taxes accompanied by very intensive enforcement. However, if the goal is primarily to enhance revenue, then calibrate the fine or taxes against the possible revenue produced. In short, the agency is now put in the position of not completely discouraging the behavior, but maximizing its pecuniary gains that might come from it.
While it may sound cynical at first, we must remember that the motives that provide the impetus for human decision-making are not static: humans are very adept in picking up new tastes and de-emphasizing more familiar ones.
The money from tax and fine revenues are like chocolate for governing bodies.
Very interesting post! I have written several times on the subject of taxes, but not on the specific topic of the "sin taxes." I will have to take off on this in a future post. Thanks!
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