Philadelphia has tried out that soda pop tax for us all and we can see how it’s going, The result is that it’s just the perfect form of taxation. The richer among us avoid it entirely, the poor end up paying it all and as no one is changing their soda pop consumption it raises lots of money. As Marie Antoinette would point out to us this makes it just the perfect form of taxation, doesn’t it? For that was, before the unpleasantness, how the taxation system worked in the France of her day, the poor paid it all and the rich were exempt. Not that this had anything to do with the arrival of the unpleasantness, dearie me oh no.
Nearly two years on, the verdict is in on Philadelphia’s “soda tax.” And it isn’t good.
Nope, it’s not good, it’s great, friggin’ marvelous.
The tax, justified as a kind of “sin tax” in the national war on obesity, did next to nothing for people’s health, new research has shown. Philadelphians didn’t cut calories as a result of the tax on sweetened drinks, nor did they shift towards drinking anything healthier. Instead, most of them just drove outside the city to buy the same old sodas from stores where they didn’t have to pay the tax. Meanwhile the poorest in the city — those who would find it hardest to drive for many miles to buy soda — just ended up paying more in taxes. “We find no significant reduction in calorie and sugar intake,” conclude researchers Stephan Seiler from Stanford University, Anna Tuchman from Northwestern and Song Yao from the University of Minnesota, in a study published this week.
It’s just super in fact.
The thing is we like taxing things with inelastic demand with respect to price. Elastic here means people change their buying behaviour a lot when we change the price by adding a tax. Inelastic that they do so only a little. And we like taxing inelastic things because it means we can gets lots of money by doing so. Booze and cigarettes being the obvious examples, oil too. We all still go buy them even though the market price is 50%, 80%, tax. Lots of lovely tax revenue so that our rulers can go play milkmaid.
So, soda pop is inelastic in demand? Great, it’s an excellent thing to be taxing then. Further, we’ve also gained that other great feature of the pre-Revolutionary taxation system, that the poor paid and the rich didn’t.
All of which was, as Marie Antoinette and hubby, Louis XVI, pointed out just absolutely fantabulous until the tumbrils started to roll.