by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Philadelphia’s tax on sugary drinks has made soda more expensive than beer in the city.
The Tax Foundation released a new study on the excise tax last week, finding that the 1.5-cent per ounce tax has fallen short of revenue projections, cost jobs, and has forced some Philadelphians to drive outside the city to buy groceries.
The study finds that the tax is 24 times higher than the Pennsylvania tax rate on beer. …
… The Tax Foundation points out that unlike most cities, Philadelphia passed the tax specifically to raise revenue, not to fight obesity. The city even includes diet sodas in its tax, as a way to raise money for pre-kindergarten programs.
However, less than half of the $39.4 million collected since the tax went into effect on Jan. 1 has gone to education funding.
“[T]he tax was originally promoted as a vehicle to raise funds for prekindergarten education, but in practice it awards just 49 percent of the soda tax revenues to local pre-K programs,” Shupert and Drenkard write. “Another 20 percent of the soda tax revenues fund government employee benefits or city programs, while the rest of the money will go towards parks, libraries, and community schools.”
Collections from the soda tax are also well below original projections of $92 million per year, due to tax avoidance.