Soda tax, for reasons of course

The Seattle City Council has decided to create what I believe is currently the nations highest soda tax.
http://reason.com/blog/2017/06/06/seattle-becomes-latest-city-to-pass-regr

So…if you were a City Councilman (or member, or whatever pronoun one happens to care for), maybe before enacting some new tax scheme to at a 1.75 cent per ounce tax you should do some research on it? Especially if there actually is data to be had? Because maybe another city like Philadelphia or Berkeley has already experimented with a soda tax?

http://www.berkeleyside.com/2017/04/24/large-study-berkeleys-soda-tax-finds-significant-drop-sugary-beverage-sales/

The City of Berkeley was rather open about the purpose of the soda tax was to discourage behavior, not raise revenue. Culturally Berkeley is a much lower consumer of “sugar sweetened beverages” and so the tax had minimal impact on shopping habits of Berkeley residents. The study data from the link above determined that SSB sales dropped 10% in the taxed area, and SSB sales rose 6% in adjacent areas without the tax. I think that means the data says that the tax was able to effectively influence the diets of 4% of the Berkeley population either because they just decided to change their diet, or they lack the means to shop elsewhere.

The city of Philadelphia on the other hand, still hid behind the “increasing revenue to pay for education” bit, and if you could see my face you would see my “shocked, absolutely shocked” face that found out that the revenue generated by the Philadelphia Beverage Tax was not delivering on expected revenues for the city: http://www.bizjournals.com/philadelphia/news/2017/05/31/soda-beverage-tax-pbt-revenue-collect-prek-rebuild.html

So the question for Seattle, with its $15 dollar per hour minimum wage, and now highest in the nation sugary beverage tax, will it end up more like Berkeley or Philadelphia? Is it taxing stuff to change behaviors? Or is it taxing stuff to raise revenue?

I’d like to point out that differential analysis of Berkeley’s soda tax points out that it really hasn’t accomplished much: http://news.cornell.edu/stories/2015/08/study-berkeley-soda-tax-falls-flat .

So what are the major differences between Berkeley and Philadelphia? Berkeley was a low soda consumption city and Philadelphia was higher. Berkeley cared more about changing people’s behavior, Philadelphia cared about increasing tax revenue to a set level to pay for social programs. Berkeley’s tax was half a cent per ounce less than Philadelphia’s tax.

Now what do those difference mean for Seattle? Well Seattle has a number of bottling plants from Pespi, Coca-Cola, and is even home to the independent Jones Soda brand. So my SWAG is that Seattle will see an increase in revenue from the soda tax, but it will also see even larger revenue losses from business that move out of the area to get away from the twin tax burden of the nations highest minimum wage married to the nations highest soda tax.

The good news for Seattle is Amazon dot Com has added to Microsoft and Boeing as major employers in the area, these industries are largely independent of the soda industry and unlikely to be heavily hit by the nations highest minimum wage at this time. But, will Amazon, Boeing, and Microsoft employees be enough to make the soda tax a net positive for Seattle? Time will tell, but I bet that like Berkeley it won’t deliver very big, and like Philadelphia it will hurt people in the beverage industry some.

 

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