Sin Tax Basics
WA taxes tobacco, cannabis, and alcohol with this type of tax designed to reduce consumption of harmful goods.
What is a sin tax?
A factory dumps waste into a river, raising water treatment costs for the town downstream. Positive or negative, and production or consumption?
What is a negative production externality?
Tobacco smoking is responsible for this percentage of all lung cancer cases in the United States.
80%
Which neighboring state has zero cigarette tax, creating a border-leakage problem for Washington?
Oregon duh
What term describes a tax where lower-income households pay a higher share of their income than wealthier ones?
A regressive tax.
A homeowner plants a beautiful garden that their neighbors enjoy for free every day. Positive or negative, and production or consumption?
What is a positive production externality?
This fraction — 3 out of 10 — of cannabis users develop this condition characterized by inability to stop despite negative consequences.
What is cannabis use disorder?
WA sin tax rate on Cannabis
37%
When a smoker raises healthcare costs for everyone around them, our slides call this type of cost imposed on third parties.
Negative externality.
Someone gets a flu vaccine, reducing the chance that their coworkers and family get sick. Positive or negative, and production or consumption?
What is a positive consumption externality?
Beyond lung damage, cannabis use is linked to increased risk of these two cardiovascular events.
What are stroke and heart disease?
Our policy redirects a portion of existing sin tax revenue toward these programs to help low-income users actually quit.
What are cessation programs?
Our slides show this triangle of lost economic activity created when WA's high sin taxes push consumers to the black market instead.
What is deadweight loss?
An estimated 35-48% of cigarettes consumed in high-tax states like WA come from this source, outside the legal tax system. What is the source?
Black market, cross-border smuggling and tribal lands(no state excise tax).
Our cannabis health slide links use to increased risk of these three mental health conditions.
What are social anxiety, depression, and schizophrenia?
WA loses this amount annually in tax revenue because 35% of tobacco consumed in the state is smuggled or illicit.
What is $152.1 million?