A soda tax in Philadelphia, implemented specifically to raise revenue (not to fight obesity) has failed to bring in the projected funds promised by the tax wizards. The tax was supposed to raise some $92 million a year, but people have taken to purchasing their soft drinks outside of the city, because the tax that is levied is a 1.5-cent per ounce tax.
The Tax Foundation studied the tax and its effects and found that, “According to some local distributors and retailers, sales have declined by nearly 50 percent. This is likely primarily due to higher prices, which discourage purchasing beverages in the city. Earlier this year PepsiCo announced it was laying off up to 100 workers because of the tax, which the company blames for costing a 43 percent drop in business. Philadelphians are also no longer able to buy 12-packs or 2-liters of Pepsi products in grocery stores due to the tax.”
This loss of revenue has begun to create further problems with the city budget. The tax was first passed to fund pre-K programs, but “in practice it awards just 49 percent of the soda tax revenues to local pre-K programs. Another 20 percent of the soda tax revenues fund government employee benefits or city programs, while the rest of the money will go towards parks, libraries, and community schools.” Thus, in July, city officials had to lower their beverage revenue projections which in turn affects the pre-K programs that are supposed to be funded by the tax.
In the final nail of absurdity, the report found that “that the tax is 24 times higher than the Pennsylvania tax rate on beer.”
Folks, here’s a prime example of how people change their behaviors — even the simplest ones like buying soda — in response to egregious, illogical, taxes.