Whiteboard Friday: Why do we tax some stuff and not others?

Gareth MorganTax and Welfare

Budget 2016 saw a hike in the tax paid on cigarettes. While some have hailed it as a step towards a Smokefree Aotearoa by 2025, others have called it a tax grab and pointed out that if Government were really interested in our health then alternatives such as vaping should be legal.

This debate is an important one to have, and a lot depends on what we are trying to achieve. However, another interesting issue this throws up is the difference between our treatment of cigarettes and other “bad stuff”. We are happy to constantly hike cigarette taxes, yet we shy away from taxing junk food. Meanwhile our taxes on alcohol and carbon emissions are relatively light compared to the harm they create.

Why are we happy to overtax some harms and undertax others?

Whiteboard Friday: Why do we tax some stuff and not others? was last modified: September 5th, 2016 by Gareth Morgan
About the Author

Gareth Morgan

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Gareth Morgan is a New Zealand economist and commentator on public policy who in previous lives has been in business as an economic consultant, funds manager, and professional company director. He is also a motorcycle adventurer and philanthropist. Gareth and his wife Joanne have a charitable foundation, the Morgan Foundation, which has three main stands of philanthropic endeavour – public interest research, conservation and social investment.