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June 9, 2016

Soda Taxes: Not About Health, Not About Sugar, Not Even About the Children

 

For months the mayor of Philadelphia, Jim Kenney, has been pushing a tax on sugared soda as a social good designed to discourage sugar consumption and to pay for expanded pre-K, community schools, and an overhaul of the city’s parks, libraries and recreation centers.

For government types, this all makes perfect sense: Try to do something about Philadelphia’s obesity problem by using taxes to discourage sugar consumption, and promise to use the money to do good, warm, fuzzy things for the children, like new schools, parks, libraries and the like. And sugared soda seems to be the villain-de-jour for do-gooders these days.

IPI generally opposes such schemes for a number of reasons: We don’t like raising taxes, period; we think people should be free to pretty much do what they want without government manipulating their behavior; we’re skeptical of government’s ability to improve society through trying to manipulate behavior; and we flat don’t trust government officials to spend targeted tax dollars on the things they promise.

And so IPI opposed the Philly soda tax.

It passed anyway, Philadelphia being Philadelphia and all. The city will now be the biggest in the nation to have enacted a tax on sugared soda. But at the very last minute, after months of campaigning for the soda tax, there were some interesting changes that proved our skepticism to be warranted.

First, the proposal was changed to include ALL sodas, not just sugared sodas. So the new tax will be on diet soda as well as sugared soda. Hmmmm. So much for all the arguments about sugar and obesity that were used to justify the soda tax.

Second, just minutes before the Philadelphia City Council voted, city finance director Rob Dubow acknowledged that yes, “some” of the new tax revenues would also be going toward the city’s general fund. Why? Well, the usual: “increased labor costs, pension costs, contracts.” Neither the public nor the Council itself had been informed of this previously.

We’re not surprised. I’m betting “some” becomes “most” shortly after implementation.

Taxes on sugared beverages are a bad idea. They simply raise prices and have a regressive impact on those consumers least able to bear the increased prices. They are an attempt by government to manipulate behavior, which is offensive and an illegitimate role of tax policy.

But mostly, you just can’t trust government to do what it promises when it comes to such targeted taxes, and the Philly soda tax is just more proof.


 

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