Lesson: Soda Tax Failure in PA

by Rob Roper

Last year Philadelphia implemented a tax on soda with the ostensible intention of “nudging” its residents into making healthier drink choices and, really, to pocket some extra revenue to pay for programs such as pre-kindergarten. The Tax Foundation reports that it has been a failure on all counts.

The Philly plan places an excise tax of 1.5¢ per ounce on soda, sugary and diet. To put this in some perspective, a normally 99¢ 20 ounce bottle of soda costs a $1.29 (30¢ extra), a six pack of 12 oz. sodas costs an extra $1.08, and a two liter bottle costs an extra $1.02.

Not surprisingly, “According to some local distributors and retailers, sales have declined by nearly 50 percent.” As a result, “local branches of Coca-Cola report a workforce downsizing of 40 positions and PepsiCo reports laying off 80-100 workers as a result of decreased soda sales from the tax.” And, the city is not meeting the revenue projections for the tax, putting the programs the tax is supposed to support in jeopardy.

All this does not mean citizens are making healthier choices. Much of the decline in sales in the city are suspected to be the result of consumers simply purchasing their soda somewhere else — and, as noted, buying other groceries elsewhere as well. This creates a ripple-effect drag on local businesses.

Further impacting the health implications of the policy, the report notes that the tax in many instances makes soda more expensive than beer, incentivizing consumers to switch from non-alcoholic to alcoholic choices.

Vermonters should take note. The Vermont legislature considered a similar tax in 2015 and 2016, and H.214 – An act relating to the imposition of an excise tax on sugar-sweetened beverages, is still alive and under consideration in the current 2017-18 legislative session. This bill proposes a 2¢ excise tax on sugar sweetened beverages, a levy 25% higher than the Philadelphia tax. New Hampshire can’t wait!

- Rob Roper is president of the Ethan Allen Institute

{ 2 comments… read them below or add one }

Jim Bulmer August 12, 2017 at 12:53 pm

Taxing does not alter behavior. Folks will simply find other sources to avoid the tax. Think of the Vermont sales tax and the boon it has had to New Hampshire businesses. But alas, the Dems pay little or no attention to failed programs in other states because their plan will be better. Ho, ho, ho.

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Raymond thomas August 12, 2017 at 11:27 pm

Lets not confuse the Vt legislature with facts!

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