Sin Tax

Subject: Economy

Context:

The government may consider bringing down Goods and Services Tax (GST) on two-wheelers from the highest slab of 28% as they are neither a luxury nor a sin good, hence merit a rate revision

Concept:

• A sin tax is levied on specific goods and services at the time of purchase. These items receive the excise tax due to their ability, or perception, to be harmful or costly to society.
• Applicable items include tobacco products, alcohol, and gambling ventures.
• Sin taxes seek to deter people from engaging in socially harmful activities and behaviours, but they also provide a source of revenue for governments.