Most common sin taxes are imposed on tobacco and alcohol products. Sin taxes are taxes imposed on usage of morally questionable products such as tobacco and alcohol. The majority of the taxes are used as revenue sources for the federal, state and local government.
Facts
On an annual basis, the federal government collects $15 billion dollars in tax revenue from sin taxes according to the Alcohol Tobacco and Trade Bureau (TTB). The revenue from the tobacco tax, for example is used to fund a health insurance program for children called Children's Health Insurance Program (CHIP)
Usage
The U.S. Census State and Local revenue data indicated that in 2008, the states amassed $21 billion dollars in taxes from cigarette and alcohol sales. The revenue obtained from these taxes goes to balance the states' budget, fund state health care programs and various state projects.
Purpose
At the local level, the revenue from the sin taxes goes into the municipality's general fund account, and is sometimes used for various prevention, cessation and treatment programs.
Prevention/Solution
Some tax funds go directly to programs that help users or abusers of these products. These programs have significant impact on reducing health care costs overtime.
Significance
The goal of these prevention and treatment programs is to have impact on the youth users to help them quit smoking or not drink and drive.
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