Bottled Water Tax — Is Bottled Water a Sin?

This Tax Day, as many Americans are scrambling to file their income taxes, legislators around the country are considering a bottled water tax.

Washington state’s legislature recently approved a revenue package that included an increased bottled water tax, as well as a tax on candy, sodas and mass-produced beers. The bottled water tax would expire in 2013, unless voters in November approve a recently-passed bonds measure. In this case, the bottled water tax would become permanent.  This tax would fund improvements to public school buildings, and also create 30,000 construction jobs.

Countless other legislators, in the U.S. and Canada, have also debated a tax on bottled water. Why tax bottled water? What does bottled water have in common with the other taxed products in the revenue package?  They are all discretionary purchases.

Many other cities have in the past applied a sin tax on bottled water (Chicago was the first to do this in December of 2007). Alcohol and cigarettes are the most common products to fall under sin tax, and yet bottled water does not contribute to any potential health risks in an individual. It’s probably more appropriate to label a bottled water tax as an Ecotax, which Wikipedia defines as a tax meant “to promote ecologically sustainable activities via economic incentives.”

Realistically, adding 5 cents or so to the purchase price of every bottle of water probably wouldn’t dissuade most people from buying bottled water — I think most consumers of the bottled water probably don’t care too much about the price, since they can have the equivalent or an even better water at home for a fraction of the cost.

The question, then, is would a bottled water tax be ethical? Is it acceptable to tax bottled water and use the money to fund education and other worthwhile initiatives?

What do you guys think?