Philadelphia's soda tax bombed as predicted

Back when Philadelphia decided to join the ranks of liberal cities fleecing its inhabitants with a soda tax to “improve their health,” we predicted here that it was going to backfire. The effects were felt almost immediately when workers starting losing their jobs at Pepsi. But still, they persevered and stuck with it. Surely people would start opting for healthier beverage options and those big tax revenues would begin streaming in to fill the city’s coffers. Now that they’ve been at it for well over a year, how did it work out? Sales in local retail outlets have plunged by more than 50% and mysteriously people are still drinking soda. (CNN)

Implementing a sales tax may help get Americans to stop drinking sugary drinks, if a new study about Philadelphia soda consumption is any indication.

In 2017, Philadelphia became the second US city to put a tax on sugary drinks and soda. In the wake of the tax, sales on those beverages dropped by a whopping 51% in the first year, according to a study published Tuesday in the medical journal JAMA.

The study compared beverage costs and sales in Philadelphia — following implementation of the 1.5 cents per ounce tax — with Baltimore, which has a similar demographic but doesn’t have the same sales tax. With the tax, beverages in Philadelphia jumped from 5.43 cents per ounce in 2016 to 6.24 cents in 2017.

Take note of how CNN chooses to open the story and the way they phrase the results. Having a sales tax of this type “may help get Americans to stop drinking sugary drinks.” Oh, so it “may,” eh? If all you read was the first few paragraphs, you might come away with the impression that this was the goal all along and it must have worked, right? A 51% decline in sales surely must mean healthier lifestyles are sweeping the city.

But that’s only if you stopped reading there. Just as happened in so many other municipalities, the report shows that soda sales in neighboring counties and towns mysterious shot up at the same time. From the article, emphasis added:

While researchers found that sales of sugary beverages fell in Philadelphia after the tax, beverage sales in nearby towns and counties without the tax went up. That suggests people may have been traveling to get their soda at a reduced price.

Wonders never cease. People stopped buying their soda in the city (and almost undoubtedly a lot of other shopping list items) and decided to shop where prices were lower. The study they reference also goes on to note that there was no corresponding increase in sales of bottled water or healthier beverage options. And as for the revenue question? They don’t even delve into that, but you can do the math easily enough. The tax on soda increased by 17%, but the sales fell by 51%.

So, let’s look at this assuming one million ounces of soda was sold anually before the tax went into effect. If sales had remained the same, the city would have realized $62,400.00 in revenue instead of $54,300.00. But with the volume cut in half, they managed to slash their revenue to $31,200.00. (I was told there would be no math. Apparently City Hall in Philadelphia was operating on the same assumption.) Great job, guys. You gutted your revenue stream, caused layoffs in the beverage industry and depressed sales in the city’s retail outlets, likely impacting entry level jobs.

But how can we blame them? I mean, who could possibly have predicted this? Well… anyone who was paying attention. The same thing happened in Chicago. It happened again in Seattle. And it nearly happened in several more California cities until the governor was forced to agree to a ten year moratorium on new soda taxes.

Dear Democrats. Please refer to the classic definition of insanity as being the practice of doing the same thing over and over again and somehow expecting different results.

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David Strom 8:41 PM on January 30, 2023