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Could they be interchangeably used? Or, is one subset of the other?

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A pigouvian tax is on goods or services that are known to have negative externalities, and for which some estimation of the economic value of those negative externalities can be made, and is there to correct the market failure. Its goal is to improve economic efficiency.

A sin tax is on goods or services judged to be morally negative. Its goal is to reduce consumption and/or appease the moralists and/or raise revenue in a way that is less likely to be successfully opposed.

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  • $\begingroup$ I read up these definitions but I'm interested in their interrelation. Is it sufficient to say that in the former negative externalities must be quantifiable while in the latter the negative externalities are subjective? For example, tax on tobacco to discourage it's consumption - is it pigouvian/sin tax/both? $\endgroup$ – yathish Mar 24 '18 at 20:30
  • $\begingroup$ There is evidence that excise taxes on tobacco (and in many places alcohol and gasoline) are there because of relatively low elasticity of demand, and are imposed at high rates because this is less economically inefficient than excise duties on other items. In other words their primary purpose is revenue raising, precisely because they are relatively weak in discouraging consumption and they are probably higher than the negative externalities $\endgroup$ – Henry Mar 25 '18 at 15:50

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