Turns out when soda cost the same as beer, people choose to drink beer. That is what is happening in Philadelphia.
The city’s 1.5 cent per ounce tax on soda has made beer a cheaper option. But that isn’t the only effect of the ill conceived plan to raise revenue.
The tax didn’t raise the money expected, according t o a study by the Tax Foundation.
Stores have already seen huge declines in soda sales, meaning people are either going outside the city to buy, buying beer instead, or not drinking soda.
Now if the residents did cut down on soda, some might see this as a win, despite the low tax revenue. But from the outset, the Mayor was quite clear that the aim of the tax was to raise money, not to influence health.
The city claimed the tax revenue would fund pre-kindergarten programs. But less than half of the meager revenue is actually being put into the school system.
What this means:
Looks like “for the children” was just another excuse for government greed.
Governments refuse to believe in economics. They think they can just continue to pile the taxes on. But once the costs get too high, people change their behavior.
Sometimes that means going somewhere else to buy your soda. Sometimes that means making different choices, like beer instead of soda.
But hardly ever do governments get what they predict. The mayor even originally wanted the tax to be 3 cents per ounce. Some stores are reporting a 50% drop in soda sales, so you can imagine what would have happened at double the tax rate. Yet all the greedy politicians imagine is dollar signs.
The beer companies are really the only ones who made out on the deal.
Might make a conspiracy theorist wonder…