Sin Taxes and User Fees

Sin Taxes and User Fees

I’ve been writing this week about a peculiar breed of taxes and fees governments impose on behavior that is deemed to be socially undesirable or even destructive. Traditionally, such taxes and fees are known collectively as “sin taxes.”

The general idea of a sin tax is that increasing the cost of engaging in a particular activity will operate as a deterrent. If we tax cigarettes, people who smoke are likely to buy somewhat fewer cigarettes, reducing their “sinful” activity.

It’s worth noting that this deterrent logic is employed, not just with regard to legal but undesirable behavior, but also with regard to illegal behavior.  There’s a certain rough calculus that often is employed when one seeks to determine the proper fine and the proper amount of jail or prison time to attach to specific crimes. On the assumption that most crimes are prompted by opportunity and desire (rather than compulsion beyond our rational control), one seeks to identify the threshold at which the “benefits” of committing the crime are outweighed by the costs of the punishment.

One example that comes to mind concerns the use of firearms in the commission of a felony. Not only has the State of Florida added prison time for the use of a firearm (on top of whatever time the criminal would do for the crime itself), but we have publicized the penalties.

If it’s about punishment, one wouldn’t bother spending all that money on a public information campaign. But it’s not just about punishment; it’s about deterrence. The hope is that would-be felons will become aware of the added prison time and decide to leave the gun behind when they next hold up a convenience store.

If such a campaign is successful, the risk of serious injury and death for innocent victims should go down significantly . . . which is, in part, precisely the point of such penalties and campaigns.

In this case, the ultimate goal is eradication of felonies committed with firearms. We don’t really expect to see it happen, but we’d be delighted if it did.

This is less true of most sin taxes. The goal, from the deterrence perspective, isn’t so much to eliminate the behavior as to moderate it. We don’t set the taxes on cigarettes so high that we expect cigarette smokers to feel compelled to stop smoking. We don’t set the taxes on liquor so high that we expect James Bond to give up his martinis. We just hope to moderate the behavior a bit . . . and, at the same time, to generate needed revenue for public services by a means that is considered less offensive than, say, a property or simple sales tax increase.

In this sense, one might view such sin taxes as user fees. One pays for the “privilege” of smoking or having a scotch and soda. Such things are not necessities (no, really, they’re not). You want them, you pay extra for them.

One might then see three rationales here for sin taxes. One, deterring to some extent the taxed behavior. Two, imposing on those who engage in the activity an added fee for the privilege, something we can justify because the activity isn’t necessary and is, to some extent, undesirable. Three, generating revenue.

Where do traffic fines fall in this conversation? Specifically, where do red light camera fines fall?

To begin with, traffic fines are for illegal activity. This suggests that the better analogy may be, not to “sin taxes” after all, but to other criminal activity.

Second, traffic fines are meant to be deterrents to the illegal (and dangerous) behavior. We may accept that we won’t catch everyone who exceeds the speed limit, or runs a red light, or otherwise drives recklessly. But if we could do so at a reasonable cost (financial and other), we would (wouldn’t we?).  Making our roads and highways unsafe for ourselves and, most especially, for others isn’t a privilege one should be able to pay for. It’s a dangerous and illegal activity that, in an ideal world, simply would not occur.

Which leads me to question the criticism of the red light camera fines.

If the purpose of such fines is to deter the behavior . . . if, to be blunt, we aren’t just trying to collect a “user fee” so that people can go on running red lights as a “privilege,” then the fee should be set high enough to be felt by the offender. If arguments are going to be made that the fees are too high, those arguments can be made in terms of excessive punishment (it hurts too much), but with a consciousness that the fee is supposed to hurt some. Otherwise, there isn’t a deterrent effect.

This is not to excuse any practices designed to trick people into violating the law, nor enforcement that denies the ambiguities around some infractions.

But if people are dying and being seriously injured by red light runners (and they are); if red light cameras and their associated fines are reducing such fatalities and serious injury accidents (and the OPPAGA report says they are), if we are publicizing the enforcement efforts in order to further deter the behavior (and we are), and if the cost of the enforcement effort is affordable, then why wouldn’t we choose to enforce the law?