In a groundbreaking legislative move, California is poised to become the first state in the U.S. to implement an excise tax on guns and ammunition, starting in July 2024. This bold measure places an 11% levy on each sale of firearms and ammunition in the state, in addition to the existing federal excise taxes of 10% or 11% for firearms and California’s 6% sales tax.
The tax, born from California’s Gun Violence Prevention and School Safety Act, has stirred significant controversy. The National Rifle Association has lambasted the law as “an affront to the Constitution,” indicating the broader industry’s concerns over the potential impact on gun sales. The gun lobby and firearms manufacturers’ reactions suggest a recognition of the measure’s intended effect: to decrease gun violence by making firearms more expensive and thereby less accessible.
Drawing parallels between the new firearms tax and existing taxes on alcohol and tobacco, the policy adopts a “Pigouvian tax” approach. This economic strategy is aimed at reducing consumption of goods that have societal costs by increasing their price. Historically, products under the oversight of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) have been associated with harmful consequences, including addiction and violent crime, and have therefore been targets for such taxation.
California’s approach reflects an evolving understanding of the economic and social costs of gun ownership. Gun-related deaths, including homicides and suicides, paint a grim picture, with thousands of lives lost annually in the U.S. and an economic impact that, by some estimates, suggests the firearms industry generates less value than it costs society when factoring in the injuries and fatalities associated with gun violence.
Researchers have modeled the potential impact of the new excise tax on the U.S. firearms market, predicting a substantial decrease in demand. According to one such study, for every 1% increase in price, demand could decrease by 2.6%. Consequently, California’s excise tax is estimated to cut gun sales by 30% to 44%, which could, if implemented nationwide, generate an additional $1.5 billion to $1.9 billion in government revenue.
Relevant articles:
– BEYOND LOCAL: California is about to tax guns more like alcohol and tobacco − and that could put a dent in gun … , SooLeader, 05/26/2024
– Opinion: Will California’s new excise tax on gun sales reduce firearm violence?, Chattanooga Times Free Press, 05/22/2024
– California Will Add 11% Tax Guns and Ammo. That Could Diminish Violence., FlaglerLive.com, 05/23/2024
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