FINANCE Minister II Datuk Seri Ahmad Husni Hanadzlah said that the government is mulling over a possible reduction of corporate and individual taxes to reduce the burden on businessmen and the people in view of the global downturn.

It is with a certain amount of trepidation that we see the increase of tax every year on booze and cigarettes – the so called “sin” tax.

But do such increases in tax reduce the consumption of alcohol and cigarettes? Not so. Many people smoke and drink to “unwind”.

There are psychologically stressed out folk out there who are addicted to these practices. They smoke and drink not because it is relatively cheap but because they are hooked.

If the taxes are increased, they will not stop or cut down. The crucial point is that increased prices will impact negatively on their standard of living. They will be less able to feed, clothe and house themselves.

Increasing taxes on booze and cigarettes will also encourage smuggling of these goods. It is an open secret that smuggled goods are flooding the market beyond the capacity of our enforcement authorities to curb.

When I was in the armed forces during the Indonesian Confrontation, we were more or less “encouraged” to smoke and drink by our peers to “soothe our nerves” in between fighting the enemy. (I personally did not subscribe to this view.) Many got addicted and continued the habit on leaving the army.

The government has made booze and cigarettes cheaper in the army. But if the government now wants to put the brakes on those in “civvy street” by increasing prices, it just will not
produce the desired results.

If fast foods are the cause of obesity, is it fair on us to call upon the government to consider increasing the tax on fast foods to curb obesity?

Source: The Sun – July 31, 2009