Any tax is a discouragement and therefore a regulation so far as it goes.
—Oliver Wendell Holmes, Jr., American jurist
While onerous regulations and bureaucratic procedures are easily identified as friction, other acts by governing bodies, like imposing taxes, can have similar effects on behavior.
Taxes and fees are friction in the purest sense. While we think of them as a source of revenue for the governments that impose them, they are also behavior modification tools.
The most obvious examples of taxes deliberately intended to alter taxpayer behavior are “sin” taxes like those on tobacco. Today, tobacco is viewed as a dangerous product with negative effects on public health and medical expenditures. ...