The Soda Tax

If you live in the Philadelphia media market, you’ve heard or seen the ads. Pretty ubiquitous. The ads talk about a “grocery tax”, which is not actually correct, in an effort to drum up support against the proposed Philadelphia soda tax of 3 cents per ounce. All sugar sweetened beverages would be assessed the tax if they are bought in the city of Philadelphia. A few numbers:

  • Liter bottle of soda – costs perhaps 99 cents on sale. The tax would add $ 1.01.
  • 6-pack of 12 ounce cans – tax of $2.16 (I have no idea what the raw product costs)

It’s a lot of money if you live on limited funds. The idea is health. From that slippery slope of ever increasing cigarette taxes, to alcohol taxes…the “sin” taxes. They are regressive taxes as they hurt the poor the most as a percentage of income. And yeah, sugar is bad for you. BUT…

Personally, I’m not a soda drinker, but when I throw parties, I buy several liter bottles of soda. From my perspective, if the cost doubled, it wouldn’t be that big a deal because the soda part of the full cost of the food and beverages is minimal. But there are a lot of people who like a soda. Perhaps they prefer it to an adult beverage, or want to use it as a mixer — that one drink to celebrate the end of the work week when they worked two jobs, have one day off and it all starts again. Likely, those people don’t have cars to drive out to the ‘burbs to spend less, and don’t have the time even if they had the car. If they’re making minimum wage (which is nowhere near $15/hour but I digress) that extra buck is a lot of money proportionally to their income.

Today both Hillary Clinton and Bernie Sanders came out with their opinions on the soda tax, since they’re here for Tuesday’s primary. She is for it, he is against it. Hillary is in favour of the tax because theoretically it will fund pre-K schooling. This is unlikely because in Australia, where they instituted such a tax, the consumption of soda went down.

“It starts early with working with families, working with kids, building up community resources,” Mrs. Clinton said, according to a CNN report. “I’m very supportive of the mayor’s proposal to tax soda to get universal preschool for kids. I mean, we need universal preschool. And if that’s a way to do it, that’s how we should do it.”

Bernie is opposed to the tax, because it’s regressive, and also questions whether Hillary’s support of this tax violates her promise to not raise taxes on those people making less than $250,000/year.

“Making sure that every family has high-quality, affordable preschool and child care is a vision that I strongly share,” Mr. Sanders said, in a written statement. “On the other hand, I do not support paying for this proposal through a regressive tax on soda that will significantly increase taxes on low-income and middle-class Americans. At a time of massive income and wealth inequality, it should be the people on top who see an increase in their taxes, not low-income and working people.”

Two very different approaches to the soda tax. Please leave you 3 cents in the comments.

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2 thoughts on “The Soda Tax

  1. pretzalz

    I’m a firm believer that all taxes are fungible. All of the taxes go into one pool and that money is allocated in the best way possible. The question with taxes is always whether it is an efficient and fair way for the governement to raise as much revenue as possible. Not what it pays for. We don’t have special taxes to pay for the cops or elected official’s salaries.

    This tax is more than the alcohol tax. Are they trying to push people from soda to alcohol? I drink a fair amount of soda, where fair amount is ~12 ounces a day, and I think this tax would be a horrible idea. I’ve been underweight my entire life and I’m not convinced that soda is bad for you.

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