I wrote in March of this year the post Chutzpah about the 1.5 cent-per-ounce distribution tax on “sugary beverages” in Philadelphia. I found these two articles to explain what is going on today, Philly’s Drink Tax Is Hurting Consumers, Businesses, and the Poor and Soda Tax Experiment Failing in Philadelphia Amid Consumer Angst and Revenue Shortfalls.
The City initially estimated that they would collect $46.2 Million in revenue between January 1st, 2017 when the tax started and the end of its fiscal year June 30th. Through some accounting sleight-of-hand known as “revised projections,” city officials stated that they have “adjusted” this number to $39.7 Million, a 14% downward revision. Too bad the actual receipts came up short of even that number, at $39.46 Million.
As with most taxes, it hurts those on the bottom of the economic ladder the hardest. Those with transportation engaged in the classic American pastime of tax avoidance by shopping outside Philadelphia where the tax was not collected. Those who couldn’t drive out to the suburbs to shop made the difficult choice to buy less food or less soda.
Please notice in the receipt below that the tax is over half the price of the product and the transaction was cancelled.
Then there are the secondary economic effects of such a tax, between Coca-Cola (40) and PepsiCo (80-100) over one hundred people have lost their jobs at the bottlers because of the drop in sales. PepsiCo is also pulling all of their 12-pack and 2-liter products from all stores that sell those products in Philadelphia. I don't have any information on if or how many people working at grocery stores, convenience stores and other places that sell soda have lost their jobs due to decreased sales at their store, or how many stores had to close because the drop in sales killed their profitability.
There is a (somewhat) good news part to this rather stupid idea, beer is now less expensive than soda, so Philadelphians are now consuming cheaper but higher calorie beer and thus becoming more overweight than they would have been if they had stuck with the now unaffordable soda. I called this a stupid idea because the tax covered all sugar-sweetened sodas, fruit drinks, sports and energy drinks, sweetened water, pre-sweetened coffee and tea and mixers in alcoholic drinks. Starbucks and other places that prepared the drinks were exempted. To show you that this is about 1) controlling the citizens and 2) raising money for the city coffers by taxing citizens to the breaking point, zero-calorie diet drinks are also subject to the tax. Thomas Farley, the head of Philadelphia’s health department admitted his stupidity when he explained why diet drinks are included: “People will be less likely to switch from sugary drinks to diet drinks, but they may be more likely to switch from sugary drinks to water, and that is what we want.” (emphasis from National Review article)
So again, Liberals show their inability to grasp second-level thinking. They institute a tax and base their economic budgets on past levels of consumption, never considering for a second that their tax might cause a decrease in demand for the product they are taxing.
When (not if) the taxes come in short of what the politicians already spent, they face a fiscal crisis. This means the services supported by the tax are now cut back or even eliminated, while the citizens have less money in their pocket. Both lose in the short and long term.