Inside Out | The time might be right to slap taxes on ‘sinful’ spending
And that falls into three clear areas: items that are self-indulgent, harm our health, and our environment
In tackling Hong Kong’s yawning inequality problem, I argued last week that it was better to encourage families at the bottom than to punish those at the top.
But anything that reduces the gap between rich and poor is by its nature redistributive – so anything that aims to put our politically corrosive inequality “gini” back in the bottle is likely to involve our rich paying a higher price than our poor. I am very tempted by “sin taxes”.
They appeal top me not simply because of my Methodist upbringing, but because they force us to think carefully about what we truly need, and what we self-indulgently want.
They also steer us away from activity that harms us, our community, or our environment. We should not be punished for indulging a need. Forcing extra costs on us if we seek to indulge a want seems hugely fairer.
Another advantage of sin taxes is that they are intrinsically local – and so are relatively hard to avoid. If a taxman tries to impose death duties on the rich, or capital gains on our investment profits, or high corporate or salary taxes, the smart and the rich quickly find slippery ways of “managing” such tax liabilities. But if you want a Rolls-Royce and want to use it on a routine basis, then taxing such purchases locally is relatively foolproof.
Don’t get me wrong. I would like for us to pay as little tax to our government as possible, and don’t want government to meddle unduly in our lives. Hong Kong’s historic preference to keep the government small and to leave as much money as possible in our pockets, is admirable and an important contributor to the success of our economy.