Post by robeiae on Mar 29, 2019 8:38:14 GMT -5
...the unintended consequences of punitive taxation.
In this case, we have the "soda tax" implemented in Philly in 2017. This isn't some small-time tax, it's a 1.5% tax on every ounce of soda sold in the city, and that's enough to jack up the price on a 2-litre bottle by a full $1. The purpose of the tax was two fold: make people healthier and raise revenues (supposedly to help education, particularly preschool).
So how are things working out? Here's a summary:
But hey, what about helping the children attend pre-K? Here's a piece trumpeting that success:
Reading the above piece, one would think the tax has been a rousing success: it's let children go to school "for free" and created a bunch of jobs AND there's still a huge chunk of change--$102 million--that hasn't even been spent. yet.
How can this be?
Back to the first article:
So, the tax caused people--who had the resources--to simply go across the border of the city and buy their stuff. The money raised by the tax is coming predominantly from the very income group that it is supposed to help: they're being taxed so they can have "free" pre-K.
And on the job creation angle: whyy.org/articles/west-philadelphia-shoprite-closing-owner-blames-soda-tax/
People in city government are pushing back, claiming that Brown doesn't have any evidence to show it was the tax. And that's kinda true, there is a lack of direct evidence, here. But there's some simple logic to apply: if some people are going across the city line to buy their soda, then they're probably doing their shopping for a lot of other stuff at the same time. Consider two supermarkets that are within a few blocks of each other. One is in Philly, proper, the other is not. If someone is looking to avoid the tax, they'll simply do all their shopping in the store where it isn't in effect, no (assuming a general equality of prices)? It's a no-brainer. So it would hardly be a shock to to see the store within the city limits see a drastic loss of sales and customers, meaning a general loss of jobs over time as well.
There's also this: www.nationalreview.com/2019/01/philadelphias-soda-war/
Swell.
ETA: And I should note that this means the revenues "raised" by the tax are therefore coming from primarily two places: the discretionary income of lower income people and the SNAP program, which means a fair chunk of the money represents, in essence, a re-appropriation of federal dollars that were intended to help people buy food.
In this case, we have the "soda tax" implemented in Philly in 2017. This isn't some small-time tax, it's a 1.5% tax on every ounce of soda sold in the city, and that's enough to jack up the price on a 2-litre bottle by a full $1. The purpose of the tax was two fold: make people healthier and raise revenues (supposedly to help education, particularly preschool).
So how are things working out? Here's a summary:
The tax, justified as a kind of “sin tax” in the national war on obesity, did next to nothing for people’s health, new research has shown. Philadelphians didn’t cut calories as a result of the tax on sweetened drinks, nor did they shift towards drinking anything healthier.
Instead, most of them just drove outside the city to buy the same old sodas from stores where they didn’t have to pay the tax.
Meanwhile the poorest in the city — those who would find it hardest to drive for many miles to buy soda — just ended up paying more in taxes.
“We find no significant reduction in calorie and sugar intake,” conclude researchers Stephan Seiler from Stanford University, Anna Tuchman from Northwestern and Song Yao from the University of Minnesota, in a study published this week.
“The tax does not lead to a shift in consumption towards healthier products, it affects low income households more severely, and it is limited in its ability to raise revenue,” they wrote.
Instead, most of them just drove outside the city to buy the same old sodas from stores where they didn’t have to pay the tax.
Meanwhile the poorest in the city — those who would find it hardest to drive for many miles to buy soda — just ended up paying more in taxes.
“We find no significant reduction in calorie and sugar intake,” conclude researchers Stephan Seiler from Stanford University, Anna Tuchman from Northwestern and Song Yao from the University of Minnesota, in a study published this week.
“The tax does not lead to a shift in consumption towards healthier products, it affects low income households more severely, and it is limited in its ability to raise revenue,” they wrote.
But hey, what about helping the children attend pre-K? Here's a piece trumpeting that success:
In the first two years that Philadelphia’s sweetened beverage tax was implemented, it’s helped to send thousands of kids to pre-K and created a couple hundred jobs, but it takes a lot of soda to pay for it all. The soda tax brought in $149 million from January 2017 – December 2018. The tax’s impact can be seen inside pre-kindergarten schools, like Spring Garden Academy, in Philadelphia’s Fairmount neighborhood.
How can this be?
Back to the first article:
There was a massive, 42% plunge in the sales of affected drinks within Philadelphia. Sales fell most in the wealthiest neighborhoods.
But there was no corresponding jump in the sales of untaxed drinks. They actually went down too, though only by a few percentage points. Instead, there was simply a huge jump in the sales of sugared and sweetened drinks in stores just outside the city.
But there was no corresponding jump in the sales of untaxed drinks. They actually went down too, though only by a few percentage points. Instead, there was simply a huge jump in the sales of sugared and sweetened drinks in stores just outside the city.
And on the job creation angle: whyy.org/articles/west-philadelphia-shoprite-closing-owner-blames-soda-tax/
A Philadelphia supermarket is closing, and its owner is blaming it on the city’s sweetened beverage tax.
Owner Jeff Brown, one of the most high-profile opponents of the 1.5-cent per ounce tax, said his ShopRite at 67th Street and Haverford Avenue will shut for good in March.
“The store lost about a quarter of its business, most of it in 2017 after the beverage tax was implemented,” said Brown, president and CEO of Brown’s Superstores Inc. “It continued to lose in 2018, and the losses were too great for us to absorb. So we are forced to close the store.”
Owner Jeff Brown, one of the most high-profile opponents of the 1.5-cent per ounce tax, said his ShopRite at 67th Street and Haverford Avenue will shut for good in March.
“The store lost about a quarter of its business, most of it in 2017 after the beverage tax was implemented,” said Brown, president and CEO of Brown’s Superstores Inc. “It continued to lose in 2018, and the losses were too great for us to absorb. So we are forced to close the store.”
There's also this: www.nationalreview.com/2019/01/philadelphias-soda-war/
A 2016 study found that sweetened beverages are the favorite item people buy with SNAP benefits, accounting for nearly 10 percent of such spending. The way the soda tax is structured — it’s levied at the point of distribution to circumvent the state’s prerogative to levy sales tax — it shows up as a simple price increase in Philadelphia, meaning soda is still considered a non-taxable item for SNAP users. It may be unwise for SNAP recipients to spend so much of their resources on soda, but people have a way of making the decisions they want to make regardless of nudging from politicians.
So it came to pass that the federal government is giving poor Philadelphians benefits with which to buy soda that is being taxed as though it were liquor by Philly’s municipal government. Unexpected side effect to that detail: Now that beer is, in some cases, cheaper than soda in Philadelphia, alcohol sales are up sharply.
So it came to pass that the federal government is giving poor Philadelphians benefits with which to buy soda that is being taxed as though it were liquor by Philly’s municipal government. Unexpected side effect to that detail: Now that beer is, in some cases, cheaper than soda in Philadelphia, alcohol sales are up sharply.
ETA: And I should note that this means the revenues "raised" by the tax are therefore coming from primarily two places: the discretionary income of lower income people and the SNAP program, which means a fair chunk of the money represents, in essence, a re-appropriation of federal dollars that were intended to help people buy food.