Sin may be in the eye of the beholder, but I generally favor sumptuary taxes on alcohol, tobacco, marijuana, gambling, what have you — call them sin taxes. Still, I have to recognize that opponents have a point when they argue that government may need revenue so much that it promotes “sin.” Here’s what’s happening with the North Carolina lottery in the Republican controlled N.C. House of Representatives: “The House plan relies on turbocharging lottery sales by more than 20 percent through increased advertising statewide.”
States May Be Stuck with Second-Best Marijuana Taxes is an adaptation, published by State Tax Notes for U.S. readers, of ” The Ace in the Game,” which was aimed at non-U.S. readers:
It says (1) taxes are second-best to monopoly, and (2) the ideal tax, based on THC potency, is out of reach.
Governor Hickenlooper of Colorado says
“his office has been in contact with a professor from Stanford, who is experimenting with water that works as an atomic signature for marijuana, allowing law enforcement to tell if it’s legal or not.
“The goal, he said, is to make it possible that ‘if you pick up marijuana, you can tell if someone paid taxes or if it was contraband.’”
Any consumable marker to would have to be nontoxic, hard to counterfeit, inexpensive to apply, and easy to detect in the field.
This reminds me of the way we tax virtually the same substance if used in vehicles (diesel fuel) and exempt it if used for heating buildings (heating oil). The exempt stuff is marked with a red dye. Can marking work for marijuana concentrates? And how about green plant material?
Jacob Sullum of Reason says black market prices should be higher than legal prices. I disagree.
He notes that black market prices in Colorado are lower than legal prices: “legal pot was selling for about 50 percent more than black-market pot.”
He then says, “That situation seemed to contradict basic economic principles. Because of the “risk premium” associated with prohibition, black-market prices should be higher than legal prices, not lower.”
No! That analysis looks only at the supply side – what producers face. On the demand side – what consumers face – why would anyone pay extra for black market product? Continue reading Legal prices should and do exceed black market prices
France now imposes a tax of 1.019 euros per liter of energizing drinks – those with over .22 grams of caffeine per liter. That’s about 35 U.S. cents tax per can of 25 centiliters (wine commonly comes in 75 cl. containers; Red Bull in the USA is typically sold in cans of 8.4 ounces, or 24.8 cl.; that 25 cent figure assumes 1.4 euros to the U.S. dollar).
The official French government site actually uses the term “taxe Red Bull” and says the tax aims to reduce excessive consumption of this kind of drink. Coffee and tea are not taxed.
This kind of cliff — where staying below a threshold makes a big tax difference — reflects the idea that products above the threshold are different in kind from those below.
Here is what passed: Sec. 8a. TAXATION AND REGULATION OF MARIJUANA; REPORT
On or before January 15, 2015, the Secretary of Administration shall report to the General Assembly regarding the taxation and regulation of marijuana in
Vermont. The report shall analyze:
(1) the possible taxing systems for the sale of marijuana in Vermont, including sales and use taxes and excise taxes, and the potential revenue each may raise;
(2) any savings or costs to the State that would result from regulating marijuana; and
(3) the experiences of other states with regulating and taxing marijuana. Continue reading Vermont Marijuana Study: Text
Potency vs. Weight: Sugary Drinks
What measuring stick to tax with: weight or strength? The ideal for cannabis is potency, but as this blog often says, we can’t measure THC content accurately enough to tax – not yet, anyway.
A new study, mentioned in the NYT June 2, 2014, suggests that measuring calories of sugary drinks (as opposed to volume, the analog for liquids to weight for dry matter), is the best tax base: Continue reading Potency vs. Weight: Sugary Drinks Tax