WHAT COULD GO WRONG? Seattle Sugar Tax Raises Soda Prices by 75 Percent.
Where will all the new revenue go? Seattle officials expect a $15 million boost in the first year. Since this was sold as a health initiative, $2 million of that will expand a city program that gives fruit and vegetable vouchers to low-income families. Of course, only $400,000 will go to actual vouchers; the other $1.6 million stays with the government for “administrative costs.”
Philadelphia, which enacted a similar tax last year, overestimated the expected revenue. Sales of carbonated soft drinks fell 55 percent inside the city, while sales rose 38 percent in the towns that surround it. It achieved neither the financial goals nor the health goals.
When the Seattle tax was first proposed, a “racial-equity analysis” found that diet beverages should be included since they are more popular among whites and the wealthy people. The politicians shot this down since they know which constituents donate to and vote for them.
Like most of these beverage taxes hitting blue cities, what is and is not included are counter-intuitive. All meal replacement drinks, powdered mixes, and most sugary coffee drinks — such as those found at local mega-company Starbucks — are exempt.
So, if you buy a bottled lemonade, you pay the tax. If you buy Kool-Aid and mix it with water at home, no tax. If you buy a Venti Brown Sugar Shortbread Latte at Starbucks, the tax doesn’t apply. If you get a Tall Brown Sugar Shortbread Frappuccino, which has less sugar, it does.
It’s cute that Seattle actually expects to collect all that revenue, instead of driving soda shoppers outside of city limits.