A tax on something that causes social harm.
"One who desired knowledge of man apart from the fruits of knowledge would seek it in the history of religious enthusiasm, of martyrdom, or of love; he would not seek it in the market-place."
—Arthur Pigou
The English economist Arhur Pigou constructed a Utilitarian argument that, in short, highlighted the need to increase the cost of harmful activities, with a view to incentivise businesses to invest in the broader social good or invest in less damaging practices, benefiting society. In the modern age it appears as, for instance, taxation on goods that cause harm in society. An example might be a tax on tobacco or alcohol products, simultaneously reducing demand by discouraging their purchase and creating revenue that can be used by the state to offset the damage done to society by the product.
COmplicated and frequently controversial, these taxes are theoritically , philosphically A Good THing, but they do rely on the expenditure of the taxes raised to directly offset the harm done by the product. As this frequently fails to happen, many view such taxes as punitive and ineffectual. Fair point.
These taxes are frequently unpopular with both industrialists and their customers. In recent news, the NRA, speaking for the arms and ammunition manufacturers of the USA, spoke out against California's proposed levy of an 11% tax on guns and ammunition sold in the state. Calling it "an affront to the Constitution" and ignoring the cost to citizens from gun violence, predictably enough.
Anti-gun advocates have long called for the firearm industry to lose the special treatment it receives, given the harms firearms cause. The national rate of gun homicides in 2021 was 4.5 for every 100,000 people. This is eight times higher than Canada’s rate and 77 times that of Germany. It translates into 13,000 lives lost every year in the US.
Additionally, nearly 25,000 Americans die from firearms suicide each year. This implies a rate of 8.1 for every 100,000 people a year, exceeding Canada’s by more than four times. More people suffer non-fatal firearm injuries than die by guns.
—The Guardian
Variations of this argument are usually offered up by the affected industries' and their lobbysists. Pigou's counterargument is straightforward. A summary of his philosophy taken from Wikipedia is clear on his view:
When the marginal social interest diverges from the marginal private interest, the industrialist has no incentive to internalize the marginal social cost (italics mine). Conversely, Pigou argues, if an industry produces a marginal social benefit, the individuals receiving the benefit have no incentive to pay for that service. Pigou refers to these situations as incidental uncharged disservices and incidental uncharged services, respectively.
Few industries are incentivsed to take care of the common societal good, and are (naturally!) inclined to concentrate on making profit for themselves and their shareholders. Pigouvian levies are often the only reasonable response in the face of this aspect of capitalist reality, unpopular though they may be. Industry may call "Foul!" and call such pracices unfair, but if the state determines that industry is not doing enough to recognise and offset harm caused to society, Society must do what it must to protect itself. No tax is popular, it is true, but I argue that most are benefcial in some regard. As with so many things, it's complicated, but in short, A Pigouvian tax is about attempting to focus on social good rather than just profit.
$ xclip -o | wc -w
504