‘Sin taxes’ punish the poor

By September 30, 2018 No Comments

By Karl Brophy
September 30, 2018

There was a time, and it doesn’t seem like too long ago, when taxes were used to raise money for things we either needed or wanted.

Government requires money to pay for teachers, nurses, doctors or the billions in interest on the money we borrowed to bail out Irish and European banks.

It gets that money by putting a levy on things we do. Government needs us to continue doing these things at significant levels or it does not get the moolah it needs. Income tax only works if we continue working, a consumption tax (Vat) only works if we continue spending, a profit tax does not deliver any cash if a company stops making profits. If this seems obvious, that’s because it is.

Tax has evolved – or regressed depending on your point of view – so much that people being paid less than the average industrial wage have half of every additional euro taken from them before it hits their bank account.

Then, if they go to buy something with the cash left over, they usually get hit for another 23 per cent.

If they buy a house out of their after-tax income, they pay a tax to buy it and then a tax every year to live in it. Not to mention another tax to pay the debts of the bank that gave them their mortgage. Car purchases are even worse: a tax to buy it, a tax to ‘register’ it, a tax to drive it and then loads of tax on the fuel required to make it go.

These taxes are not nice, but at least they’re understandable. Government needs money, people need to be paid.

But at some point in the recent past, taxes, both real and proposed, have become fines. They have been weaponised as a kind of Schrödinger’s tax policy – ostensibly intended to raise unceasing revenue while simultaneously discouraging Ireland’s new venial sins such as eating, drinking, smoking, using a straw, buying a can of Coke, owning a diesel or petrol car instead of a Nissan Leaf, buying a takeaway coffee and not carrying your shopping in a cotton tote bag (which needs to be used thousands of times to be more environmentally friendly than plastic, by the way).

Ireland already has among the highest alcohol taxes in Europe, but this week the government moved closer to passing a law which will almost double the price of inexpensive wines sold in Lidl and Aldi countrywide while having no effect on bottles of wine that cost more than 20 quid in posh Dublin shops.

Sugar taxes also fall far more heavily on the poor, even though scientists are yet to discover a human digestive system that can discern its host’s annual income.

The problem, as campaigners and some in government see it, is that the poor are too stupid to eat as well as richer people. Their solution is to tax the things poor people like and this will, magically, make poor people start eating like rich people.

Governments, including ours, seem to believe poorer people are smart enough to be allowed to choose their own government, but should be arbitrarily punished with higher food bills, just in case they might be carrying a bit of timber around their guts.

A couple of weeks ago in comments on the upcoming budget, the Irish Heart Foundation called for a 156 per cent increase (yes, 156 per cent) in the tax applied to hot takeaway food because snack boxes and spice bags are fuelling a national “health crisis”.

If this ‘Supermacs tax’ came to fruition, it would mean a snack box (725 calories) and ice cream cone (200 calories) would attract a tax rate well over double that applied to a 2,000 calorie tasting menu in a certain Michelin star restaurant opposite Government Buildings.

Taxes and artificially inflated prices are increasingly justified as a means of control to force people, particularly poorer people, to behave “better”.

The ends can’t even be said to justify the means. There is plenty of evidence that deliberately making people poorer does not make them any healthier.

Mexico introduced a sweeping sugar and ‘junk food’ tax four years ago. Earlier this month, the United Nations reported that the number of obese people in that country has since increased by four million to 24 million.

We need not wonder either what would happen if these ‘sin taxes’ actually did stop people eating batter burgers or buying petrol. If the taxes are successful, then the state will be down billions of euro every year – billions it currently spends on things like teachers and nurses.

We know wealth is by far the best predictor of all sorts of outcomes, including health. And education is the best indicator of whether people will achieve wealth. As a side benefit, wealthy people pay much more tax and this virtuous circle can continue through generations.

You don’t even need to be very well educated to work out that investing tax money properly in education is a good thing for all involved. It just takes a long time for the results to materialise. Even longer than it takes to build houses.

If you want everyone to behave, eat and drink more like rich people, then do something to make them richer. Not poorer.

Because there is not now, and there never will be, a tax that makes kale a more attractive option than curry chips.

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