How many times have you heard from a politician that the answer to a problem is a new tax? These days it seems lawmakers are pushing soda taxes as the solution for everything from budget shortfalls to obesity, but an expert with the Tax Foundation says this is a deeply flawed tax policy that will just make things worse.
First and foremost, there’s the fact that taxes on common grocery items like beverages hurt the poor and working class more than anyone else. John Buhl of the Tax Foundation explains that an analysis done by the think tank found that a “10 percent soda tax could burden high-income families by $24.29, while poor families would be harmed nearly twice that amount at $47.38.”
Politicians who see soda taxes as an easy way to raise revenue to close a budget gap or fund a program should think twice says Buhl. “Ideally, public services should be funded by taxes with a broad base and low rate. Soda taxes are the opposite, subjecting a narrow tax base to very high tax rates.”
When people shift their shopping habits to respond to higher prices -- as they have in Philadelphia where a tax has made a 12-pack of sports drinks more expensive than a 12-pack of beer -- “policymakers will face a budget gap from expanding services with a narrowing tax base that doesn’t fill the void,” says Buhl.
On top of that, the domino effect of falling sales means businesses are forced to cut jobs. Hundreds of layoffs have already been announced in Philadelphia where the tax has been in effect less than three months.
The bottom line according to Buhl is, “These taxes likely won’t fund what’s being promised, won’t resolve the obesity problem, and will hurt workers and consumers.”