The City’s regressive soda tax has raised the price so that beer is cheaper than soda—leading people to consume more beer.
When you raise the price of a good you cause people to buy less of it. That’s why raising the minimum wage increases unemployment—it raises the price of labor. Philadelphia promised to raise needed revenue by taxing soda. But the revenue from the tax is less than expected because people aren’t buying as much as they used to. Instead, they’re drinking more beer.
The Washington Free Beacon reports, “Study: Philadelphia Tax Makes Soda More Expensive Than Beer.”
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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.
“Purchases of beer are also now less expensive than nonalcoholic beverages subject to the tax in the city,” according to the study, written by Courtney Shupert and Scott Drenkard. “Empirical evidence from a 2012 journal article suggests that soda taxes can push consumers to alcohol, meaning it is likely the case that consumers are switching to alcoholic beverages as a result of the tax. The paper, aptly titled From Coke to Coors, further shows that switching from soda to beer increases total caloric intake, even as soda taxes are generally aimed at caloric reduction.”
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