Taxing the tempted: Personal addictions,sustainable revenues and the public good

The regulation of gaming, tobacco and alcohol is challenged by new realities. First, fewer people are convinced that government regulation of these indulgences is consistent with a rights‐based society. Second, while provincial budgets have continued to climb, the revenues drawn from “sin taxes” (excise taxes from tobacco and alcohol and revenues from gambling) have declined as a proportion of total revenues. As a result, these taxes will not cover the important social and health care costs triggered by the new permissiveness. This study contributes to budget theory by examining the changing policy landscape and sheds light on how Canadian provinces in particular have attempted to balance individual rights, social oversight and provincial revenues. It concludes by speculating on other addictive products that could soon be framed as worthy of taxation.     

Nonfinancial Risk Disclosure and the Costs of Private Ordering

In 2016 the Securities and Exchange Commission (SEC) considered for the first time whether financial disclosure reform should address information on sustainability matters and other sources of nonfinancial risk. The resulting debate over these issues raised fundamental questions about how well the federal disclosure regime addresses emerging risks and about how well private ordering, through shareholder engagement, the work of private standard‐setters, and corporate voluntary disclosure, can fill the gaps. This article argues that the current model of nonfinancial risk disclosure, based largely on private ordering, is ineffective and undermines the SEC's mission to protect investors, facilitate capital formation, and promote fair, orderly, and efficient markets. This conclusion rests on evidence that the current state of sustainability disclosure is inadequate for investment analysis and that these deficiencies are largely problems of comparability and quality that cannot readily be addressed by private ordering. This article also highlights the costs of agency inaction to investors and to public companies, which have been largely ignored in the debate over the future of financial reporting. It concludes by proposing avenues for disclosure reform.