The crack in the Liberty Bell got wider last week when the Philadelphia City Council passed a measure to levy a tax on soft drinks.
Although the tax was sold as a “sugary drinks tax,” it applies not only to regular soft drinks, but also to diet soda, energy drinks, sports drinks, and juice containing less than 50 percent fruit juice.
And it is huge! As Patrick Gleason noted on Forbes.com, while the current excise tax on a twelve pack of beer is nine cents, the new soft drink tax raises the cost of a twelve pack of Coke by $2.16!
Unlike other cities that have introduced soft drink taxes as a public health measure, Mayor Jim Kenney openly admitted that Philly’s soda pop tax was designed to raise revenue for the city. In a press conference following the vote, Kenney claimed, “this is the beginning of a process of changing the narrative of poverty in our city.”
Actually, this is the same old narrative that we’ve heard time and again: give the government enough money and it can solve every problem. In this case, Kenney wants to increase funding for education with the revenue raised from the soft drink tax. In reality, Kenney is “helping” the poor by taking their money away from them, a fact that prompted even Bernie Sanders to oppose the new measure.
Proponents of Philadelphia’s soft drink tax claim that it will raise $91 million a year. What they are not taking into account is that soft drink consumption rates are declining nationwide. In addition, such a drastic price increase is going to dramatically reduce sales. So the city faces a double whammy of a market trend exacerbated by government policy. The result is sure to be budgetary shortfalls.
On the other hand, consumers may “vote with their feet” and go outside the city to stock up on soft drinks. Based on current consumption patterns, this tax is going to cost a family of four over $200 a year. Cutting consumption is one way to avoid the addition expense, but so is buying in a cheaper jurisdiction. In any case, grocery and convenience stores in Philly are the losers.
Finally, a grey market in the soft drink trade is bound to spring up. Although this sounds ridiculous, that is exactly what has happened in New York City due to the Big Apple’s exorbitant taxes on cigarettes. The consequences have proved tragic.
In the summer of 2014, protests erupted around the nation in response to the death of Eric Garner, who died after being put in a chokehold by a NYC police officer. Why were the police arresting Garner? He was suspected of selling “loosies,” single cigarettes from a pack without a tax stamp.
Thanks to the Philadelphia City Council, instead of Marlboros, the next Eric Garner may be selling unlicensed cans of Mountain Dew or Rockstar!
Nevertheless, proponents of government imposed eating and lifestyle mandates such as Jim Krieger of Healthy Food America and former NYC mayor Michael Bloomberg gleefully proclaim that Philly’s soft drink tax is a harbinger of the next wave of municipal taxation. In addition to raising money for spendthrift city governments, it dampens demand for products that they don’t like.
One is reminded of the words of British writer C.S. Lewis:
“Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.”
The government’s job is to protect our liberties, not make sure that we eat and drink things that meet the approval of elitists like Bloomberg.
Philly’s soft drink tax is going to place a heavier tax burden on businesses and individuals, especially the poor. Even worse, it further limits freedom of choice and individual liberty.
We can argue over the health problems that soda may cause, but it is clear that Philly’s soft drink tax is a rotten idea with some horribly unhealthy consequences of its own.