Sin taxes are stupid. They allow rich people to "sin" more.
Pretty profound, except that having more money allows the rich to do many things moreso than others.
"Sin taxes" should be used only when the consumption of a product has an indirect, substantial cost to society. For poor people in particular, there is a cost to society from their consumption of alcohol, cigarettes and high-calorie, low-quality food. That cost comes about when they expect society to pay for medical treatments to remedy the consequences of an unhealthy lifestyle. That expectation will only grow if plans for universal heathcare come to fruition.
Of course, the rich take actions that have societal costs, too, such as driving large luxury vehicles and flying private jets, which damage the environment disproportionately relative to the transportation modes of their less-wealthy fellows. Those products and actions are also legitimate targets of sin taxes.
And as far as the "magic of the market" folks who oppose something like sin taxes, there's only one thing to say: Grow up. The market does not magically give you what you want just because you have the money to buy it. Companies sell you whatever they see to be in their interests to sell you. If a company sees a new product (like a "healthy drink") being detrimental to its existing cash-cow product lines (perhaps because the new product is less profitable due to higher production costs relative to its viable price of sale), they simply won't offer that product or will limit its distribution to "upscale" markets where they don't see it cannibalizing their core profits. Of course, some "scrappy start-up" could try to offer the new product, but such a company may be too small in scale to produce and/or distribute it widely and profitably. And that's when you have a market failure: When the existing companies in a market do not see it in their interest to offer new products, and when new companies cannot viably compete or can do so only marginally, the market has failed. Of course, whether a sin tax will actually remedy that favor is another question entirely.
N.B. As far as "market failures", they can also result when a new product has a very high R&D cost that an industry in unable or unwilling to bear. For example, the development of alternative fuel automobiles has largely stalled because automakers had no interest in producing them, even though consumers had an interest in buying them. An automaker had two alternatives: It could fund a development cycle in some new area (e.g., fuel cells). That might fail expensively and entirely. If it did produce a viable product, the cars would initially be very expensive and have a limited market due to high production costs, low yield (new assembly lines), etc. If the new cars found an enthusiastic consumer base, the costs could be brought down, production ramped up, until such vehicles could be real alternatives to current automobiles. Or, the manufacturers could just shrug, say its not worth the risk, and keep doing what they're doing. New car companies could try to produce the alternative fuel vehicles, of course, but they'd lack the budget to fund the R&D and the distribution network (dealers) for the products. This example becomes even more complicated when one considers that in order for such a vehicle to be viable, energy companies must actually distribute the fuel for it. They may have no interest in doing so for the same reasons I outline above. When you get such an interplay in established industries where each has enormous self-interests and little, perhaps conflicting incentives to innovate, the market is not going to "sort itself out."
