Sin goods and sin tax
- Finance Minister recently said that two-wheelers are neither a luxury nor sin goods and so, merit a GST rate revision.
- Sin goods are goods which consider harmful to society.
- Example of sin goods: Alcohol and Tobacco, Candies, Drugs, Soft drinks, Fast foods, Coffee, Sugar, Gambling and Pornography.
- Sin Tax is placed on goods that adversely affect health, most notably tobacco and alcohol.
- Three principal arguments are used to justify this type of taxation:
- It can reduce consumption through increased prices.
- Compensate society for things like increased health system costs.
- Increase resources for the health sector.
- According to the current GST rate structure, some of the sin goods that attract a cess include cigarettes, pan masala and aerated drinks
- Countries such as the UK, Sweden and Canada impose Sin Taxes on a series of products and services, from tobacco and alcohol to lotteries, gambling and fuel, which chip in with sizeable revenues.
