Just For The Laughs

First of all, I want to wish hyvää vappua to all of my Finnish readers, klara vappen to my Swedish readers and happy labor day to all of you rest. The Finnish Vappu is the holiday of joy and laughter. It is the time when university students with their overalls start spreading across towns and cities and all the people are filled with happiness. It is the start of the summer and fun.


Finland was recently ranked as the most happy nation in the world. Despite the government's efforts to restrict people from having too much fun during 1915-1981 with taxation.


So what is this all about? In 1915 the government of Finland (under the Russian reign at the rime) set up a taxation to events of entertainment like concerts, movies, theater plays and dance events. The aim of this was to engage the audiences and the organizers of different forms of entertainment to participate the costs of the society by gathering tax from the people who would participate in the cultural events. The level of the tax varied during its lifetime between 10 % to 50 % of the price of the entrance ticket.


The tax was different to different forms of entertainment. The kind of entertainment that the government considered as "bad" got a higher tax than the entertainment which was judged as "good". This also gave the audience preferences of "higher cultural" events like theater-drama and classical music concerts over the ones of disgraceful comedy shows and rebellious rock concerts. For example the Stanley Kubrick film Clockwork Orange suffered from high tax rates because the movie was considered as "bad and the quality of the content being morally pejorative".


This (like any other tax) created incentives of tax evasion. Magicians and singers were branding themselves as non-entertainers and performing shows in their basements to avoid taxation. Tax exemptions were granted to movies that would include a short educational films. This might be the cause why videos like this exist.

The whole purpose of the tax sounds absurd. Why people should pay the government for seeing shows organized by private organizations and film-makers. Seems that the purpose of the tax was to tax the people. However, I would think that the nature of the tax was only to direct people towards "healthier" forms of entertainment away from sex and pornography.


We could also consider the tax as a Pigovian tax to decrease the effect of negative externalities. Going to see a peasantry comedy could create negative externalities of consumption in terms of sound pollution (laughter) and bad jokes in the streets. For this token, I would impose a tax for all of the shows of Putous.


Going to a Rolling Stones concert could encourage the people to be more rebellious and try drugs and alcohol which could increase crime rates and raise costs in the economy. Also the production of rock music and erotic musicals would create negative externalities in terms of uncomfortable noise pollution (but is Rock'n'Roll noise pollution?). The Pigovian tax would reduce the effects of the externalities to the economy and reduce the size of the market failure.


I'm going to end up this blog to a thought that I want all of you to think: All the taxes (like the one described above) can be politically and economically justified. But that doesn't mean that they would work or be reasonable in any way.


Hyvää vappua!


Text: SW
Pictures don't belong to me