Sin Tax: Costs More to Smoke Than to Drink

The purpose of this essay is to highlight the steps the South African government are taking to reduce the consumption of alcohol and cigarettes through the use of market measures.

The importance of this issue is that government intervention is trying to act in the best interest of society. By increasing the cost of sin tax, there may be a reduction in over consumption of alcohol, and health issues associated with smoking.

These issues are addressed through the use of taxing the bad and encouraging the good by taxing alcohol and cigarettes.

The conclusion was drawn that government intervention may have the advantages and disadvantages for increasing the sin tax.

In South Africa cigarettes and alcohol are consumed on a daily basis, much like anywhere else. However, South African's tend to consume more of cigarettes and alcohol if the price is cheap. As drinking is becoming an increasing problem in South Africa one way to curb the problem is by increasing the cost of alcohol. Cigarettes are also being heavily consumed and with the introduction of the new smoking laws one hopes that smoking can be reduced. Another way to reduce smoking is by increasing the tax on buying a box of cigarettes. With government intervention the price of buying a box of cigarettes has risen by R1.24, and the cost of alcohol which differs for beers (340ml), spirits(750ml) and wine(750ml) has increased by 6.5c, R2.22, and 0.12c respectively (Star, 2010:1). According to the Cape Argus (2010:1) "increasing the price of alcoholic beverages is one of the most effective interventions to reduce use of alcohol". With the increase in sin tax smokers and drinkers are finding it difficult to afford their luxuries on a daily basis.