Taxing Live Erotic Shows [Updated]
- posted by Jim Leitzel @ 11:06 PM

Vice Squad was out of town in late December when (links in this post are not safe for work) an Illinois appeals court ruled that Chicago could not exempt small live entertainment venues, except for strip clubs, from a tax on ticket sales. Such a provision discriminates against erotic businesses based on the content of their expression, the court ruled, and that sort of discrimination has to jump through high and multiple hoops to be constitutional. On New Year's day, a $5 per customer tax went into effect for Texas strip clubs. The first constitutional challenge to the tax was brushed aside in mid-December, before the Chicago ruling. The Texas law looks for Constitutional cover from the "secondary effects" doctrine, which did not seem to come into play in the Chicago tax.

Update: This week's Economist also has an article on Texas's "pole tax". The article mentions the recent popularity of earmarking the proceeds for new taxes. (Part of the controversy surrounding the Texas strip club tax is that the proceeds are directed to programs aiding sexual violence victims, despite there being little in the way of hard evidence that strip clubs increase sexual violence.) Beyond the Texas case, all of the earmarked taxes that are mentioned are vice-related: (non-diet) sodas, tobacco, and video games have all recently been singled out for taxes with earmarked revenues -- an approach frequently used for gambling taxes, too. Meanwhile, a Pennsylvania state senator is looking at an earmarked tax on adult businesses (link not safe for work).

Labels: Chicago, dancing, Illinois, tax, Texas

 
More on Sweden and Alcohol
- posted by Jim Leitzel @ 10:47 AM

Sweden's high tax/public retail monopoly regime for alcohol has been under assault from the EU for some time. It's a standard free (or non-discriminatory) trade versus vice policy collision, not unlike the one that the US has going with Antigua and the WTO concerning internet gambling. Last month, an EU court adviser indicated that the much higher taxes applied by Sweden to wine than to beer were a form of disguised discrimination, because much of the beer is Swedish whereas most of the wine is imported. But it's perfectly sensible to tax higher alcohol products more highly, so once again, Vice Squad sides with a country's domestic vice policy over the free trade mandates; in the long run, I think that allowing trade rules to trump domestic vice policy is likely to harm both vice policy and commitment to free trade.

The EU court need not follow the advice, however, of either Vice Squad or of the official adviser.

Labels: alcohol, EU, Sweden, tax

 
Raise Alcohol Taxes, Save the Planet
- posted by Jim Leitzel @ 11:39 PM

A doubling of the US federal alcohol tax would restore it, in real terms, to about the level that it stood at in 1974. And I think that there is much to be said for an alcohol tax hike. Nevertheless, it would probably require a much more significant tax hike before the US could avail itself of a benefit that very-high-alcohol-tax Sweden has uncovered: improving the environment. It's quite simple, really. First, you institute those really high alcohol taxes. Then, as folks attempt to smuggle untaxed alcohol into your country from abroad, you seize the occasional smuggled shipment. Then, you dispose of the confiscated hooch by giving it to a biofuels firm that converts the beverage alcohol into enviro-friendly fuel. Then you power trucks and busses with the alcohol-based biogas, so smugglers and customs agents can operate more cheaply. The policy is not only win-win, it violates the Second Law of Thermodynamics. (OK, maybe the smugglers aren't winners, and then there are all those Swedish citizens who are paying huge prices for a glass of wine with dinner.)

I wonder if the Finns hit on that idea?

Labels: alcohol, Sweden, tax

 
Economists For Higher Alcohol Taxes
- posted by Jim Leitzel @ 7:49 PM

Nearly 60 US economists are in such sufficient agreement that they signed a petition to Congress calling for higher alcohol taxes. (The petition, a 3-page pdf file, is available here.) Besides supporting higher alcohol taxes in general, they also think that beer should not receive favorable tax treatment relative to wine or spirits, on a per-ounce of alcohol basis. The signatories include four Nobel Prize winners, and several leading vice policy researchers.

I support higher federal excise taxes on alcohol in the US; but I am less certain that spirits shouldn't be taxed more highly than wine or beer. Naturally fermented alcoholic beverages have been around since time immemorial, but distilled alcohol is a relatively recent phenomenon. I think that it is more dangerous than fermented products, and that stricter controls, possibly including higher taxes, are appropriate for the more-potent products. The fact that beer is the beverage of choice for youthful drinkers is in part a response to the lower taxes and less-strict controls, yes, but I am not sure that we want to implicitly encourage a substitution to hard liquor via a policy that treats beer, wine, and spirits identically.

Labels: alcohol, tax

 
The EU Pressure on Swedish Alcohol Controls
- posted by Jim Leitzel @ 6:42 PM

One of Vice Squad's favorite topics is how the EU's commitment to free trade is making it hard for EU member nations to maintain strict alcohol policies. The possibility of purchasing massive quantities of cheap alcohol abroad and importing it to some degree undermines a high-tax regime, for instance -- as Sweden is learning. The linked article also points out that EU trade policy has liberalized Sweden's alcohol advertising regulations:

Also last year, the EU ordered Sweden to lift its ban on alcohol advertising, which was deemed an unfair barrier to market entry. Before the ban was lifted, even Absolut Vodka, which is made in Sweden, was barred from placing its catchy ads in Swedish magazines.

Vice Squad likes to claim that allowing free trade, free speech, or antitrust policy to trump vice policy sows the seeds for undermining trade, speech, and antitrust, while simultaneously engendering less-than-optimal vice policies.

Labels: alcohol, EU, free trade, marketing, Sweden, tax

 
Two Quick Updates, One Concerning Tobacco, the Other, Alcohol
- posted by Jim Leitzel @ 5:22 PM

Tennessee is looking to tax "Little Tobacco" companies by 50 cents per pack to protect the state's revenue from the 1998 Master Tobacco Settlement. This is simply the latest development in a long, long cycle of activity in state houses throughout America; one recent (yet, oddly, not the most recent) related Vice Squad post is here. An excerpt from the linked article: "The cost of many standard cigarette brands has gone up as a result of the lawsuit settlement, while these off-brands can be half the price. That means that not only are the state's children being enticed to buy cigarettes, less money comes into the state's coffers as large manufacturers' profits drop, said [the bill's sponsor]."

The alcohol update concerns the tight new anti-alcohol restrictions in Aboriginal areas in Australia. First the new controls brought "Winegate," a political scandal involving a government plane that landed in the prohibition zone...with a wine bottle on board! Now an Aboriginal political leader is in trouble after a can of beer was tossed, so the accusation goes, from his car as it approached a police roadblock.

Labels: alcohol, Australia, Master Settlement Agreement, tax, tobacco

 
Holiday
- posted by Jim Leitzel @ 6:45 PM

Today is one of those special days when the usual rules
concerning vice are suspended. So pay little heed to
this warning, borrowed from deadlysins.com:

In the words of nineteenth-century Russian Bishop Ignatius Brianchaninov:

Wise temperance of the stomach is a door to all the virtues. Restrain the stomach, and you will enter Paradise. But if you please and pamper your stomach, you will hurl yourself over the precipice of bodily impurity, into the fire of wrath and fury, you will coarsen and darken your mind, and in this way you will ruin your powers of attention and self-control, your sobriety and vigilance.


(Back to Vice Squad.) No mention from Ignatius as to
whether a tax on fatty foods would be a good idea.
Happy holiday!

Labels: obesity, tax