Final answer:
A sin tax is a type of tax levied on goods or services deemed harmful, such as cigarettes or alcohol, to discourage their use and generate revenue. An example of a sin tax is a 10% tax on gambling winnings. Other taxes, not aimed at harmful goods, are not considered sin taxes. The correct answer is option a)10% tax on gambling winnings.
Step-by-step explanation:
One example of a sin tax is a)10% tax on gambling winnings. A sin tax is typically added to goods or services that are considered harmful or costly to society, such as tobacco and alcohol. These taxes are meant to discourage consumption while also providing the government with revenue.
For instance, state and federal governments levy taxes on cigarettes. In 2021, state-level cigarette taxes varied drastically, with prices ranging from 17 cents to $4.35 per pack depending on the state, and the average cigarette tax was $1.76 per pack. The federal tax was $1.01 per pack, and there was a proposal to increase this federal tax to $1.95 per pack.
The increase in tax is often used as a deterrent, affecting consumer behavior by reducing the consumption of these goods. On the other hand, b) 15% tax on profits from stock sales, c) 30¢ tax per gallon of gasoline, and d) 9% tax on all sales do not specifically target socially undesirable or harmful goods or behaviors, therefore, they are not considered sin taxes.