Thanks to Tax, Philly Soda is More Expensive Than Beer

Is Philadelphia's soda tax driving consumers to drink? The Tax Foundation thinks so.

Ah, the good ol’ Philadelphia soda tax. News stories about it never seem to dry up. The latest is a Tax Foundation report that states the fact that, since the levy on soft drinks (diet or regular), sweet coffees, teas, and even flavored waters went into effect on January 1st, soda is  even more expensive than beer in the City of Brotherly Love. The study was overall quite critical of the tax, reporting that, in the months since its inception, it has cost  people their jobs, brought in revenue that falls short of expectations, and forces Philadelphians to drive outside of the city for groceries.

Is Philadelphia’s soda tax driving consumers to drink? The Tax Foundation thinks so.

The Tax Foundation reported that the city’s 1.5-cent-per-ounce tax on soda was 24 times higher than Philly’s taxes on alcoholic beverages, implying that the soda tax might actually be driving people to drink… beer, that is.

“Purchases of beer are also now less expensive than nonalcoholic beverages subject to the tax in the city,” says the study, via a quote on Fox News. Co-written by Courtney Shupert and Scott Drenkard, it continues: “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.”

The Tax Foundation study also took aim at the soda tax’s profits, which were largely touted as a way to fund early childhood education throughout Philadelphia. “In practice it awards just 49 percent of the soda tax revenues to local pre-K programs. 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,” says the report. The soda tax has brought in $39.4 million, short of the $92 million that was anticipated.