Vice Taxes: A Legitimate Means of Generating Revenue or a Curtailing of Freedoms?

A tanning tax? Are you kidding?


After July 1st 2010, the cost of tanning will include a 10% federal tax included in the health care reform bill.  This idea is a variant of vice taxes, which have assessed a surcharge for decades on alcohol, tobacco products and gambling.  Taxes on tobacco products generate $15 billion in federal revenue annually, while alcohol taxes add nearly another $10 billion to federal coffers.  Meanwhile, gambling taxes contribute more than $5 billion to state revenues.  Vice taxes are levied on items considered to be immoral luxuries and their purpose is twofold:  to discourage activities and/or the use of products deemed detrimental to the public, and to use the tax money in ways that benefit society.  Occasionally the use of the money will be in stark contrast to its source, such as applying a tax on tobacco products to support cancer research.

Tanning salon owners nationwide are understandably nervous.  The new tax will take money and customers away from this multi-billion dollar industry, and businesses owners are encouraging patrons to sign anti-tax petitions or write their congressman.  Because tanning salon customers tend to be college-age men and women, some have labeled the tax as discriminatory and targeting a specific demographic.  Tanning is not restricted to a specific group, however, and most regard the tax as similar to vice taxes.

Tanning salons are the proverbial tip of the iceberg.  Vice taxes are continually growing broader in scope and more inclusive.  Discussions have centered around a “fat tax” on fast foods or unhealthy snacks.  Rumor has it this tax might even extend to soft drinks.  If you like a Coca-Cola with your Big Mac and super-sized French fries, indulging a taste for fast food could not only pack extra inches on your waistline, but simultaneously make your wallet considerably lighter (free refills would probably become a thing of the past, also).


Here a vice, there a vice.....

Ordering a drink in a restaurant subjects you to a "vice tax"
Ordering a drink in a restaurant subjects you to a "vice tax"
Taxing the sale of cigarettes adds billions to the federal revenues
Taxing the sale of cigarettes adds billions to the federal revenues
Who just won--you, or the government?
Who just won--you, or the government?
Now even tanning will be taxed an extra 10%
Now even tanning will be taxed an extra 10%
Vice taxes:  coming soon to your favorite fast food restaurant
Vice taxes: coming soon to your favorite fast food restaurant
Better order water--soft drinks are targeted, also
Better order water--soft drinks are targeted, also
If they run out of vices to tax, will the healthy stuff be next?
If they run out of vices to tax, will the healthy stuff be next?

What's next?


The need to generate state and federal revenue will always exist—government and the services it provides is not cheap.  What will be next?  What will prevent any activity we indulge in from being presented in a negative light and summarily taxed?  Might we soon see a DVD rental or purchase surcharge, justified by the conclusion that watching movies promotes a sedentary lifestyle?  Will someone publicly denounce an attractive appearance as narcissism and propose a vanity tax on hair spray, shaving cream or toothpaste?  Could a “narcissism law” encompass a fashion tax placed on the sale of jewelry, hats or belts?  Perhaps we will find ourselves taxed for reading a book or newspaper if online reading is deemed more environmentally friendly.

If the government can adapt our behavior through taxation, what will happen if our actions are modified to the extent that a new strategy is required?  If taxation makes our vices unaffordable, would the next step be to tax good habits?  Will positively reinforced behavior become a future target?  When we’ve given up sodas because we can’t afford them, will the government move on to taxing juice and water?  If we abandon French fries, will a fruit plate double in price?

Perhaps positive behavior will not fall prey to excessive taxation.  Vice taxes is an easier sell to the public—justifiable because they suggest a moral high road.  The cumulative effect on personal choice ends up crippling, however, and some view vice taxes as a way to curtail individual freedoms.  They are perceived as attempts by the government to regulate behavior.   The argument suggests that if an activity is legal, there should not be monetary punishments for its indulgence.  The legal system alone must define what activities should be curtailed due to their harmful effects on individuals or society.  It is easy to view taxation as punishment, but this rationale seems overly simplistic and ignores “non-vice” taxes.  If vice taxes can be seen as punishment, why not view sales tax in the same way?

Others argue that vice taxes affect poorer sections of the population more than the rich ones.  It is suggested that those less well off are more apt to smoke, drink or gamble.  Studies might link vices to the less affluent, but there are statistically more poor and middle class people than wealthy ones, and naturally the numbers will suggest it is a working class problem.  I am inclined to believe that no social class is immune to temptation.  Wealthier citizens might drink champagne instead of Bud Lite, but they are not inherently less inclined to imbibe.    

It is difficult to view the levy of vice taxes as a financial solution to anything.  A comparison can be made between vice taxes and the airline industry’s decisions to create a separate charge for any service offered during the course of a flight.  They might get a few extra dollars out of charging for the use of a pillow—or they might have a storage bin filled with unused pillows.  The money earned from their pillow rental will not help the airlines in any meaningful way because their problems are far deeper and more complex.  It is a band-aid placed on a deep wound.  It is also true that vice taxes will not substitute for the tax revenue generated by a healthy economy with low unemployment.  What will result when this is acknowledged and the government decides a 10% tax on tanning isn’t enough?  Could we eventually pay double or triple the price of the products or services we are purchasing, just in taxes?  Where will it end?  Your tan, cigarette or glass of wine might help repair potholes on Interstate 70, provide money for schools or contribute funds for cancer research.  When they run out of vices to tax and there are more schools to build and roads to repair…what then?



Variation on a theme

It was recently reported that some employers in Kansas are requiring workers who use tobacco to pay higher premiums in an effort to lower health care costs, and lying about smoking could cost employees their jobs. Employers in a midwestern Kansas Health Center imposed a $35 "tobacco-user surcharge" to employees who smoke or have a spouse or dependents who smoke. As with vice taxes, this practice leads to questions about how far employers will go to dictate worker's health habits. While the practice is defended as a means to help people make healthier choices, it is seen by many as punitive.

What's your opinion?

What do you believe? Do you see the taxing of vices as a constructive means to generate federal revenue? Is it a type of luxury tax, imposed on products and services we desire but don’t need? Is it morally acceptable to impose this tax, realizing that the goods taxed are not essential?

Or, do vice taxes represent an improper attempt by the federal government to adjust our behavior? Is this taxation a form of punishment for lifestyle choices that are perfectly legal in the United States? Is it repressive and unfairly aimed at lower-income citizens?

Vote in the poll below and let us know what you think, but don’t expect vice taxes, fat or tanning taxes to go away anytime soon. There’s too much money at stake for the government not to embrace this method of generating revenue. It will be up to the people to decide whether French fries from the dollar value menu will still be worth it if it’s taxed another dollar.

Vice taxes: the poll

What do you think of vice taxes?

See results without voting

Comments 16 comments

drbj profile image

drbj 6 years ago from south Florida

What a thought-provoking hub, Mike.

With the rate our government is spending money or should I say throwing away money, I think it's a sure bet to expect more taxes on more products, services and activity.

Mike Lickteig profile image

Mike Lickteig 6 years ago from Lawrence KS USA Author

drbj, thanks for your comments. It seems certain that vice taxes will continue to be seen as a solution. A strong economy, more jobs, and more money to spend will supply more tax dollars than vices will--but it will clearly take some time to right the economy.

Thanks for reading, I always appreciate your comments.


Ghost Whisper 77 profile image

Ghost Whisper 77 6 years ago from The U.S. Government protects Nazi War Criminals

We are trillions of dollars in debt--no amount of taxing on the United States citizens will get us out of this--it is just a matter of time that it all falls. These taxes rank up with forced health care to all the people who can not afford health care as it is...just a matter of time...there will be even more poor people than there is already and the middle class that was somewhat making it...well they will be the new poor. We will end up with two classes-the very rich and the very poor with no middle class. The pain hasn't even started yet. Strap on your seatbelt and protective head gear...the pain is acoming.

I find it really rediculious--the soda tax--the tanning tax--you know that people are going to stop tanning-stop buying soda--not because of a boycott but because they can not afford it. I am waiting for the sunshine tax-and the fart taxes-and the tax on breathing more than your "air" share. lol

Mike Lickteig profile image

Mike Lickteig 6 years ago from Lawrence KS USA Author

Ghosty! Thanks for reading. Your "air share" line was a good one. With your permission, I might have to borrow that at some point.

You are absolutely right about the state of things. It is all coming down around our ankles, and not all the vice taxes in the world are going to help. None of this will generate anywhere near the tax revenue that would come from a strong economy and jobs that pay enough to allow us some spending money. I wonder if we will ever see that again, but I think I know the answer. You're right, we better strap on the head gear.

I thought I was relatively safe in that my biggest "vice" was soda, but they found even my innocuous weakness and targeted it.

Be sure to stock up on air before the tax you foresee hits!

Thanks for reading, Ghosty. I've missed your viewpoints and perspective on my humble pages.


thevoice profile image

thevoice 6 years ago from carthage ill

terrific hub read so right profit for addiction thanks

Mike Lickteig profile image

Mike Lickteig 6 years ago from Lawrence KS USA Author

voice, thanks for reading. Your comments are appreciated.


pmccray profile image

pmccray 6 years ago from Utah

It's done in an effort to hopefully stem the obesity in adults and children by treating us as the latter. This will not change our spending or eating habits. Taxing fast food would have been more effective.

Mike Lickteig profile image

Mike Lickteig 6 years ago from Lawrence KS USA Author

pmccray, thanks for reading. You're correct, the "fat tax" won't change our eating habits and the effort is patronizing and condescending. I think obesity is a serious problem in the United States, but trying to suck money out of us certainly isn't the answer. The government knows it isn't the answer, as well--they know it is a source of revenue that will not dry up.

Well, thanks again for your insights. They are appreciated.


doitrightnow profile image

doitrightnow 6 years ago from San Juan, PR

This is an excellent post. And like others, I love your analogy to the airlines. Obviously we don't have the advantage of seeing all their numbers, but to me, it makes zero sense to anger all your passengers with unreasonable fees and hidden charges just to get a couple extra bucks. Seems to me, if someone put out a decent airline with real service, everyone would flock to that one.

By the way, a lot of these same BS arguments are used to justify a tax on churches these days. I wrote about that one in this post:

Mike Lickteig profile image

Mike Lickteig 6 years ago from Lawrence KS USA Author

doitrightnow, thanks for stopping by. The airlines' financial strategies are totally absurd to me. I can't fathom how they figure they will gain by charging for pillows and blankets while charging almost as much for bags as for the ticket in some cases. If the airplane's cabin loses pressure, don't be surprised if the oxygen mask that drops down from the cabin ceiling can be accessed for a small $10 charge....

Thanks for reading.


prettydarkhorse profile image

prettydarkhorse 6 years ago from US

Hi Mike I just dont like the fact that it will affect the poorer segment of the population, but for tanning, it has side effect so it might be one way to stop people from tanning, but it should nto be the way to do it, Thank you for this hub, Maita

Mike Lickteig profile image

Mike Lickteig 6 years ago from Lawrence KS USA Author

Maita, you're right--the poorer folks do tend to bear the brunt of the vice taxes, and it will only get worse if the "fat tax" is implemented. It may well curtail an admittedly unhealthy activity (tanning), but I agree that taxes shouldn't be a means to shape society's behaviors.

Thanks a lot for reading.


Betty Reid profile image

Betty Reid 6 years ago from Texas

Interesting points, especially addressing the lower class indulgences and the idea of a luxury tax.

Mike Lickteig profile image

Mike Lickteig 6 years ago from Lawrence KS USA Author

Betty, thanks for reading. Many people see the "vice taxes" as being a lower class tax because gambling and the use of alcohol and tobacco are viewed as more attractive to poorer people. It is a difficult issue, and I still am convinced the only real solution lies in a stronger economy and more jobs--that is how the government will generate the revenue it needs.

Thanks again for reading.


Patricia 6 years ago

I'm all for vice taxes. People who drink and smoke and tan should have to contribute money to the government that will more likely than not have to pay for the future consequences of those activities through medicare and medicaid. I don't have a lot of sympathy for the poor who choose to indulge in these unhealthy practices rather than to save their money and change their situations in life.

Mike Lickteig profile image

Mike Lickteig 6 years ago from Lawrence KS USA Author

Patricia, I understand your position completely and you are certainly not alone in feeling that vice taxes are justified. Tanning might be on a different level than alcohol and tobacco-- tanning customers tend to be college-age men and women, and perhaps of a higher economic class than the demographic of other vice taxes. However, the intent is still the same.

While I don't view it as a real solution for generating federal revenue, I do believe vice taxes have guided people toward healthier choices, and perhaps there is a benefit to this.

I appreciate your opinion, and thank you for stopping by.


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