Why Should Michigan Charge an Excise Tax on Marijuana?
If a product is deemed legal by the State of Michigan then why should people who buy that product also have to pay an excise tax?
I recently read an article in the Mlive news service that states that if Michigan citizens vote to legalize recreational sales and use of marijuana in Michigan this fall the state will have the lowest tax rate on marijuana sales in the nation.
I then read that the ballot proposal as written would charge an excise tax of 10% on the sale price, which does not include the 6% sales tax. I thought to myself why are they charging an extra 10% tax on a legal product?
An excise taxes by definition is paid by the retailer, while sales tax is paid by the consumer. In reality though the retailer will raise the price of the product in order to cover that excise tax so the end the consumer will end up paying for it.
There are currently nine states that have legalized recreational marijuana, they are Alaska, California, Colorado, Maine, Massachusetts, Nevada, Oregon, Vermont, and Washington.
Now back to my original question, if a state or any political body legalizes a product or service why should the end user have to pay an extra tax on that product or service and not on all others?
I understand that they call them “sin taxes” but what is the sin if it is legal?
What is a “sin tax”, well according to Investopedia it is”
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 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 behaviors, but they also provide a source of revenue for governments.
Well if a product or service is “harmful or costly to society” then why legalize it?
Could this be just a huge tax money grab, you decide.