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Journal of Public Finance and Public Choice

Optimal taxation of sin goods: an analytical review

Authors:
Maria Alessandra AntonelliSapienza University of Rome, Italy

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Angelo CastaldoSapienza University of Rome, Italy

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Valeria De BonisSapienza University of Rome, Italy

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Alessandro GandolfoUniversity of Pisa, Italy

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Article Category:
Review Article
Copyright:
© AESP 2022
Online Publication Date:
02 Aug 2022
Pages:
232–259
Publisher:
Bristol University Press
Volume/Issue:
Volume 37: Issue 2
DOI:
https://doi.org/10.1332/251569121X16571984676251
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We present an analytical literature review on optimal sin taxes. After identifying the distinctive features of sin goods, we develop a simple, encompassing model of the taxation of sin goods that allows for treating the main models found in the literature as subcases. We derive the optimal sin tax rates, while also considering the subsidisation of healthy goods. We then discuss the Pareto-improvement result obtained in the theoretical literature, confronting it with the debate on the regressivity of this kind of taxation. We highlight the crucial role of the interaction of tastes, self-control problems and poverty when deriving policy conclusions from theoretical models.

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Maria Alessandra AntonelliSapienza University of Rome, Italy

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Angelo CastaldoSapienza University of Rome, Italy

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Valeria De BonisSapienza University of Rome, Italy

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Alessandro GandolfoUniversity of Pisa, Italy

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alessandra.antonelli@uniroma1.it
angelo.castaldo@uniroma1.it
valeria.debonis@uniroma1.it
alessandro.gandolfo@unipi.it

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