Finance Minister recently said that two-wheelers are neither a luxury nor sin goods and so, merit a GST rate revision.
Sin goods are goods which consider harmful to society.
Example of sin goods: Alcohol and Tobacco, Candies, Drugs, Soft drinks, Fast foods, Coffee, Sugar, Gambling and Pornography.
Sin Tax is placed on goods that adversely affect health, most notably tobacco and alcohol.
Three principal arguments are used to justify this type of taxation:
It can reduce consumption through increased prices.
Compensate society for things like increased health system costs.
Increase resources for the health sector.
According to the current GST rate structure, some of the sin goods that attract a cess include cigarettes, pan masala and aerated drinks
Countries such as the UK, Sweden and Canada impose Sin Taxes on a series of products and services, from tobacco and alcohol to lotteries, gambling and fuel, which chip in with sizeable revenues.
