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Editor at Large

Soda tax gouges consumers and in turn gouges retailers, workers

One of the most outrageous money grabs in recent American government history occurred in Philadelphia last year when the politicians there passed a tax on soda.

Known as the sugary beverage tax, the tariff is 1.5 cents per ounce and took effect Jan. 1.

The fallout goes beyond the wallet of consumers. The new tax, which is at the wholesale level, is now hurting retail outlets – including mom-and-pop corner stores – that sell the drinks and it also harms the workers who make and distribute the beverages.

Because the tax is eventually passed along to the consumer, the price of a 2-liter Coke jumps, for example, from $2 to $3.01 – a 50 percent hike that does not even include the state’s 6 percent sales tax and the city’s already existing 2 percent sales tax.

Another example: A 12-pack of Pepsi (144 ounces) soared from $5.50 to $7.66 – again not including the 8 percent sales tax the state and city already get.

Grocers and retailers in the city say they have seen a big drop in sales for sugary drinks such as soda, Gatorade and sweetened iced tea. Reports show Philadelphians drank 40 percent less soda in January, for example.

Meanwhile, distributors say they are laying off workers in response to the drop in demand. Pepsi, for one, announced this month it will lay off 80 to 100 workers in Philadelphia-area distribution plants as a result of the fallout from the tax.

And in an unexpected upshot, Temple University plans to raise the cost of its meal plan for students by an additional 4.8 percent next school year just because of the soda tax.

The city cites the importance of the money to fund pre-kindergarten education, schools and parks and recreation. The city also says businesses and wholesalers are overreacting and that there is no need for them to pass along the entire tax to consumers.

The city must be high on Coke. The next time a business doesn’t pass along a tax to consumers will be the first time.

There is a middle ground, here, though. Rather than a 1.5 cents-per-ounce tax, how about a half-cent tax?

Sure, it will hurt consumers, but only somewhat, and it’s not necessarily the kind of increase that changes habits or causes Philadelphians to drive just over the city line into the suburbs to buy their soda. And the revenue generated for the city might still be enough for the pre-K program, which appears to be the most worthy of the reasons behind the tax.

Meanwhile, remind me to bring my own Turkey Hill iced tea – one of the greatest drinks ever created – the next time I cross into our state’s biggest city with the state’s biggest taxes.

RANDOM SHOTS AND SECOND THOUGHTS

-- I’d like to personally thank the Houston Police Department, FBI and U.S. Justice Department for solving the mystery of who brutally kidnapped the game jersey worn by Tom Brady during the Super Bowl. I understand the U.S. Marshals Service is now preparing background checks and 20-page dossiers on each of the top 500 prospects in the NFL Draft, with particular attention to cornerbacks, for Bill Belichick.

-- Through the first weekend of the NCAA Tournament, my bracket ranks in the top 1.75 million. So, I have that going for me.

-- No one could have known the Sixers would be starting T.J. McConnell, Dario Saric, Robert Covington, Timothe Luwawu-Cabarrot and Richaun Holmes at this point of the season and actually doing somewhat well for being such an undermanned team. Probably no one really cared, either, but that shouldn't dampen the good news that the team looks competitive. But the bad news is that Sixer would-be superstar Joel Embiid gets hurt a lot and the team is still two years away from two years away from making a playoff run. See you in 2020 if Embiid gets and stays healthy. If not, see you in mediocrity.

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