Sin goods taxation: an encompassing model

We analyse optimal sin taxes. After identifying the distinctive features of sin goods, we develop a simple, encompassing framework that allows to treat the main models found in the literature as subcases. We derive the optimal sin tax rates, 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.