Why I am Against the Philly Sweetened Beverage Tax, a.k.a. Soda Tax

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On January 1, 2017, the administration of Philadelphia mayor Jim Kenney instituted a city-wide beverage tax. This tax imposes a 1.5 cent/per ounce tax on any sweetened beverage (soda, juice, tea, etc.). Basically, this translates to a tax of about a dollar on a two liter bottle of soda. The hope of the city is that the money collected from this tax will fund universal pre-k, libraries, parks, rec centers, etc. This law was spearheaded by do-gooders in the city’s medical elite and public education system. The doctors were behind it because they hope that the tax will reduce obesity. Educators support it because it, the hope is, will expand access to pre-K for Philadelphia residents. Pre-k, they allege, has very beneficial effects on students, to the point of helping some who would otherwise end up in prison.

I think that arguments for this tax are a house of cards. I will use an argument by process of elimination to go through arguments in favor of the tax one by one, all the while showing that each argument is flawed. Simply, there are too many “ifs” in this law for it to do much good. The only certainty in the law is that it will take money out of the economy and hurt business in the city.

1) The tax will raise money to support pre-k. This is good. Let’s do it. After all, the education of children is more important than the profits of people in the soda industry. People in the soda industry are basically bad people, who make money off of people by getting them hooked on soda that is grossly unhealthy.

Let’s take apart this argument. First, will the money go to support pre-k? Some of it will. There are a couple of issues here, though. In the initial rollout of the tax, the claim was that all the money from the soda tax would go to establishing universal pre-k. The additional ends for the revenue stream from the tax were added on by Mayor Kenney after his discussions with the City Council. We now know that 20% of the money will not go to pre-k. Instead, it will go to nursing homes, programs that help the homeless, the Community College of Philadelphia, and, oh yeah, benefits for government employees. This last item should give one pause. Okay, so what, though? The other causes that the soda tax is benefiting are also good, and government employees deserve benefits, too. I’m cool with it. The second problem, though, is the strong possibility of corruption in the city government. This is especially risky in a government that is so heavily dominated by Democrats, as Philadelphia is. There are few Republicans to serve as a watchdog for ethics violations.  The government of the city of Philadelphia is a hotbed for ethics violation and waste. How else can one explain the uniquely high tax rate on Philadelphia residents, with taxes on cigarettes, gas, liquor, property, etc., and the chronically failing schools that can barely put together a workable budget each year, not to mention a $5.9 billion pension shortfall? (see the link below on ethics violations for more detail) So, when you talk about money going to pre-k, you need to take into account the likelihood of waste and abuse.

Onto the next component of the argument. You have some money (minus other projects, minus waste, fraud, abuse) which you hope to use on developing universal pre-k. And pre-k is good. In fact, there have been studies by leading academics that show that pre-k can keep people out of prison. Keeping people in prison costs money, so we can save money by keeping people out of it. So, again, so what that the mean soda people lose out?

Here is another “if”, though. The first “if” is how much of the money collected through the tax really goes to pre-k. The second “if” is that pre-k really keeps people out of prison. I admit, I am not an expert on this topic. But, I have some common sense. How much of an impact does pre-k really have? There are a lot of other factors that go into formation of a child’s character: job opportunities when they get older, elementary, middle, and high schools, the availability of playgrounds, positive adult role models, the presence of police, family income, etc. There are really a million such factors. Someone could have great pre-k and end up a criminal. Someone could not have pre-k and end up a great person. Do people go around asking other people if they’ve been to pre-k, and then acting like it’s a degree from an Ivy League School? “Wow, you had pre-k? Nice!” Academic studies don’t prove the connection between pre-k and future good citizenship. There may be correlation, not causation.

Another “if” here is whether the pre-k the city offers will be good. Does mediocre pre-k really drive people way from crime? Or, does pre-k have to be excellent to drive people away from crime? So, if the pre-k the city offers is really good, then maybe we can reduce the prison population in the city.

Another “if” with the pre-k is whether people will sign up or not. How do Philadelphia progressives know that people will sign up for these programs? Maybe some people will just be indifferent. So, if the pre-k the city offers is really good, then maybe we can reduce the prison population in the city, if enough people actually sign for pre-k.

2) Hold on a minute. You’re forgetting the health benefits. The soda tax will reduce obesity. That’s really good. Again, the soda industry is a bad industry.

Will it, though? Maybe people will just pay the extra fee because they still want to enjoy the beverage. Or, people will just get their sugar fix some other way–candy, cakes, popsicles, ice cream, cookies, etc. History disproves the idea that the government can nudge people with a tax to eat healthier.

“Soda and candy taxes do not necessarily decrease caloric intake,” reports the Tax Foundation, which has studied the issue. “One recent study finds that when adolescents switch away from soda due to price increases, the drop in calories is offset by an increase in calories consumed in other food and drink.”

This is yet another “if”! So, if the pre-k the city offers is really good, then maybe we can reduce the prison population in the city, if enough people actually sign for pre-k. And, we might be able to reduce obesity.

And there’s yet another problem! If the soda tax drives down consumption of sweetened beverages, then there will be less money for pre-k. Soda consumption is going down anyway, as more people become aware of its effects on the body. The soda tax will reduce soda consumption (not obesity, though), and the funds for pre-k will start to go down.

So, liberals in favor of the soda tax can’t have it both ways. THE TAX WILL FALL APART BY VIRTUE OF ITS OWN CONTRADICTIONS! Funds for pre-k will dry up, and the city will be looking again for other ways to finance their programs.

3) There is one thing that is not an “if” in this policy of “ifs”. This is, that the soda tax will hurt business in the city. There is no doubt this will happen. People who make money off the sale of sweetened beverages are going to lose profits. This is the inevitable logic of the policy. Grocery stores, bars, delis, pizza places, fast food restaurants–all will see a dip in profits. Some of them, particularly the small local businesses and corner stores, will be forced to close. This is what happened in Mexico when a soda tax was imposed there, and that will happen here.

So, the only certainty in this policy is that a sector of the economy of the city will take a hit. There will be reduction in jobs. Entrepeneurs and developers will be wary of starting up business under the Kenney administration.

A bunch of hypotheticals and maybes is not enough to justify this certain harm. Does the following argument sound convincing? The soda tax will harm a significant segment of the city’s economy. But, if the pre-k the city offers is really good, then maybe we can reduce the prison population in the city, if enough people actually sign for pre-k. And, we might be able to reduce obesity.

http://www.nationalreview.com/article/444491/philadelphia-soda-tax-consumers-businesses-poor-hit-hardest

http://www.newsweek.com/does-soda-tax-reduce-obesity-ask-mexico-429214

https://strongnation.s3.amazonaws.com/documents/149/0b3247f5-0f13-45c5-8ffe-dd30cf2d8b9c.pdf?1470666950&inline;%20filename=%22I’m%20the%20Guy_%20FC_PA.pdf%22

Ethics violations in city: http://thehill.com/blogs/pundits-blog/state-local-politics/293718-all-corruption-is-local-in-philadelphia

http://www.forbes.com/sites/patrickgleason/2016/06/18/philly-soda-tax/#74ecd6341894

https://beta.phila.gov/services/payments-assistance-taxes/business-taxes/philadelphia-beverage-tax/

http://www.philly.com/philly/news/politics/20160614_Drink_tax_proposal_had_some_sweetners.html

 

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