Sin tax is defined as a tax on substances or activities considered sinful or harmful (such as tobacco).

'Gunnah' tax hysteria: What exactly is sin tax?

According to Merriam-Webster Dictionary, the first known use of 'sin tax' can be traced to 1957.
Published December 5, 2018

Following National Health Services' (NHS) announcement on Tuesday that a ‘sin tax’ would soon be imposed on cigarettes and sugary beverages, some Twitterati took an exception to the use of the word 'sin' — translated as 'gunnah' in Urdu.

"I’m a chain cigarette smoker myself and I appreciate all the measures taken by the government to discourage smoking and I understand it’s injurious to health but this term 'Gunnah Tax' is inappropriate," shared PTI Minister Faisal Vawda, via Twitter. "If this is gunnah then what would we name and term the actual gunnahs."

The move appears to have sparked an outcry on social media, but 'sin tax' is not a term coined by the PTI-led government.

According to Bloomberg, Britain's excise tax on distilled spirits — which was enacted in 1643 — can be considered as one of the earliest examples of a sin tax.

The same article also says that the United States has a long history of taxation on alcohol, tobacco and gambling which first started in 1791.

sin tax noun

Merriam-Webster Dictionary: a tax on substances or activities considered sinful or harmful (such as tobacco, alcohol, or gambling)

According to Merriam-Webster Dictionary, the first known use of 'sin tax' can be traced to 1957.

Countries where 'sin tax' is levied

The director general of the NHS Ministry, Dr Asad Hafeez, while talking to Dawn said that tax on tobacco and sugary beverages is being charged in some 45 countries. The United Arab Emirates and the United Kingdom are among those countries.

“A sin tax is an internationally recognised term and is specifically levied on certain goods deemed harmful to society, for example tobacco, candies, soft drinks, fast foods, coffee and sugar,” he said.

Last year in October, the UAE began taxing soft drinks and cigarettes "to curb the consumption of harmful products and attempts to introduce new sources of state income".

It placed a 50 per cent tax on carbonated, sugary drinks, and a tax on energy drinks and tobacco products of 100 per cent.

“Thailand, as well as a number of other countries, has similar taxes that are earmarked for healthcare services,” said Dr Hafeez.

He explained that India imposes a sin tax on gutka and paan masala, and the sums thus collected are spent on the healthcare sector since these products cause illnesses that become a burden on the public exchequer.

Does it affect behaviour?

According to Bloomberg, sin taxes are used to discourage behaviour because "it is argued that certain behaviours generate negative externalities that cause a greater financial burden on society."

When applied, this theory suggests that these negative behaviours “deserve” to be taxed more than other behaviours of the society.

Health professionals American Heart Association, World Health Organisation, and the Mayo Clinic argue that these taxes are critical in helping to change behaviour and improve health, adds Bloomberg.

While there's not enough evidence yet to know whether such taxes lead to a decrease in diabetes or obesity, some research has found links between high levels of sugar in people's diets and high levels of diabetes, according to a Business Insider article.

A 2013 study at Stanford University examined data from 175 countries over the past decade, and found that increased sugar in a population's food supply was linked to higher rates of type 2 diabetes.

Other research has also suggested that obesity puts people more at risk for type 2 diabetes.

A 2017 Asian Development Bank study also linked that a 20pc tax on sugar-sweetened beverages was associated with a three per cent reduction in overweight and obesity prevalence in China, with the greatest effect on young men in rural areas.

An analysis of sugary-drink purchases, carried out by academics in Mexico and the United States, has found that the 5.5% drop in the first year after the tax was introduced was followed by a 9.7% decline in the second year, averaging 7.6% over the two-year period, The Guardian reported in 2017.

Mexico has high rates of obesity – more than 70% of the population is overweight or obese – and sugar consumption. More than 70% of the added sugar in the diet comes from sugar-sweetened drinks, added the publication.