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Oof. Seattle Sugar Tax Raises Soda Prices by 75 Percent
Seattle residents started the new year with a bad case of sticker shock followed by a sugar crash. A new tax of 1.75 cents per ounce was added to all sweetened beverages sold in the city. The move had public support in June when it was passed 7-1 by the Seattle City Council, but images of regret have been hitting social media as the bill came due Monday.
The prices at an area Costco showed that the tax increases the price of Gatorade by 65 percent and Dr Pepper by 75 percent. To avoid complaints from outraged customers, the discount chain posted an explanation of the steep price increase.
THEY ARE NOT MESSING AROUND WITH THE NEW SUGAR TAX IN SEATTLE pic.twitter.com/xqmj7940y2
— hayden 🌹 (@HaydenBedsole) January 5, 2018
"Why do you hate the government so much?" they ask. pic.twitter.com/rodI1Yl9R2
— Devin Sena (@DevinSenaUI) January 5, 2018
Where will all the new revenue go? Seattle officials expect a $15 million boost in the first year. Since this was sold as a health initiative, $2 million of that will expand a city program that gives fruit and vegetable vouchers to low-income families. Of course, only $400,000 will go to actual vouchers; the other $1.6 million stays with the government for “administrative costs.”
Philadelphia, which enacted a similar tax last year, overestimated the expected revenue. Sales of carbonated soft drinks fell 55 percent inside the city, while sales rose 38 percent in the towns that surround it. It achieved neither the financial goals nor the health goals.
When the Seattle tax was first proposed, a “racial-equity analysis” found that diet beverages should be included since they are more popular among whites and the wealthy people. The politicians shot this down since they know which constituents donate to and vote for them.
Like most of these beverage taxes hitting blue cities, what is and is not included are counter-intuitive. All meal replacement drinks, powdered mixes, and most sugary coffee drinks — such as those found at local mega-company Starbucks — are exempt.
So, if you buy a bottled lemonade, you pay the tax. If you buy Kool-Aid and mix it with water at home, no tax. If you buy a Venti Brown Sugar Shortbread Latte at Starbucks, the tax doesn’t apply. If you get a Tall Brown Sugar Shortbread Frappuccino, which has less sugar, it does.
Local convenience store owner Jong Kim is frustrated, to say the least:
“What can I do? I have no power,” he mused, shrugging his shoulders behind the counter at his store, Summit Foods. “Seattle is too expensive. Everything is a tax.”
Oh well, I’m sure this foolish new soda tax will turn out fine just like Seattle’s foolish minimum wage hike.
Published in Economics
I don’t have too much of a problem with taxes on cigarettes and alcohol as long as the purpose is revenue generation. When they’re used to modify behavior, I’m against them.
I thought ketchup was a vegetable.
Technically it’s a smoothie right?
I have a post that will end up on the Main Feed I have a link to a source for my assertions.
I think you have to add sugar.
That means you are against them. They are the embodiment of “sin” taxes.
Possibly. One problem is that some people are always eager for an excuse to make inroads on banning speech, whether or not it will do any good.
Do you really want to confirm leftwingers in their belief that revenue taxes don’t modify behavior?
I’m of the Walter Williams “The country would be better off if, on April 15, you bundled up the money you owe the government and threw it into the fire” school. So, yes.
I didn’t even imply that.
Thanks, I’ll give it a read. Authorities here in Washington have busted some very-well financed sprawling illegal growing operations in recent months. Only fools believed that legalization would reduce this type of criminal activity.
Okay, end of hijack. Returning to topic at hand: sin tax on soda.
Perhaps you didn’t, but you are putting distance between the purpose and the unintended consequences.
Okay wait, this is a joke from the Gorilla Channel people, right?? It’s impossible to parody these people anymore.
What bothers me about the whole idea of a tax to offset the cost to society of health problems, is that I don’t want the society to be responsible for my health costs. I didn’t ask for that, it was foist upon me. Now that it is a reality…I also have to be told what I can and cannot do because of it hurting society.
Another point is the difficulty of separating the motivation for this tax. Ostensibly a ‘health & Wellness’ issue, yet it cannot be denied that it is also about raising money. If ALL of the money was going directly to some health program maybe it would be easier to defend (though not to me personally), but as with the new Tobacco taxes a while back, there is only a fig leaf of such direct payments. As we see the consumers begin to shift their purchasing to untaxed locales you can expect the cries of ‘budget shortfalls’ to bring a new round of ideas of what health issues need addressing.
I’m not following you. Any tax is going to have behavioral consequences, intended or not. All I’m saying is that IMO the purpose of taxes is to raise money to enable the government to operate. When the purpose changes to behavioral modification, I’m against it.
One aspect of the problem is that states and local government base their budgets on projected revenues. When the projections don’t meet the revenue that’s already been spent they start looking for new taxes to try and cover the budget shortfall.
OK. Then how about when we raise some taxes and cut others in order to modify the behavior of businesses, to motivate them to create more jobs. Are we also against that?
The Cook County Sweetened Beverage Tax was stupidity on stilts. Folks that were driving over the line to buy sweetened pop were buying their non-sweetened beverages over there too, as well as other stuff. Sales tax revenues didn’t merely fail to go up — they decreased due to the loss of sales. Distributors distributed less, resulting in layoffs. It lasted all of two months.
I used to time my visits to my parents in Will County so that I didn’t have to pay Cook County’s gas tax either.
I’m not quite sure why businesses should be taxed at all.
You’re painting me into a corner, aren’t you?
Aaand, in this morning’s Seatttle Times.
And here is a comment from that article:
I’m trying my best to find out if there is a corner.
I don’t know if the commenter was accurate, but something to think about.
I also remember reading in rushbabes blog that the tax was not designed to go to the user, but to the distributor. Basically designed to attack the distributor’s bottom line. Of course, this user fee actually is tacked on to the cost of the product, and is paid by the consumer.
I thought I was pretty straightforward in #136.
You were, but I’m not sure it’s possible to be that straightforward. Ever since (at least) 1790 taxes have been both about revenue and about changing behavior.
That doesn’t make it right.
Most things we do aren’t right, but we’ve muddled along with this one OK without any major traumas, such as the Civil War was. I sometimes wish Alexander Hamilton didn’t get his way as much as he did, but I wouldn’t have wanted Thomas Jefferson to have his way, either. And that issue of changing behavior vs taking revenue is not even the point at which Jefferson opposed Hamilton.
The attempt to tax sugar comes about from some serious problems in the relationship between government and the people of this country, and I’d rather we try to remedy those than expend our energy adhering to a principle that nobody has ever adhered to or even consistently advocated.
They raise taxes for purposes of spending, of course. But they first choose to tax things that the Left finds odious, for two reasons: 1. Because it’s harder to defend things like cigarettes and liquor after all their PC smear campaigns, and 2, for the ancillary benefit of behavior modification through social engineering. I don’t notice them placing punitive taxes on tofu or kale.
The trouble is those pesky unintended consequences.