Poor tax policy
Poor tax policy
Regarding the news story “Lawmakers think drink tax could save struggling Pennsylvania cities” (Oct. 27 and TribLIVE.com): The proposed expansion of drink taxes beyond Allegheny County and Philadelphia to 21 other municipalities, like most “sin” taxes, is unlikely to raise the revenue its proponents expect while having a negative effect on local businesses.
Relying on sin taxes has proven to be poor tax policy due to being notoriously unreliable and regressive, and because they are often used to prop up increased spending.
Sin taxes often have strong detrimental effects on local small businesses, with consumers seeking to avoid the tax by voting with their feet and buying products outside the city imposing the tax.
Sin taxes should be avoided because they distort the market and encourage unsustainable increases in government spending while placing an unnecessary burden on lower-income taxpayers.
Instead of creating and increasing discriminatory taxes, cities across Pennsylvania should focus on tax reform that lowers rates and puts dollars back into taxpayers' pockets while tightening their own belts by creating new, reasonable limits on spending.
The writer is a senior policy analyst at The Heartland Institute (heartland.org).
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