The latest example of sin tax stupidity comes from Seattle, Washington. The new tax on sugary drinks began on January 1, 2018, as a means to “discourage consumers from buying sugary drinks while raising revenue for nutrition and education programs.” It’s a tax of 1.75 cents per ounce.
For example, it will now cost $2.14 for a 20-ounce soda, up from $1.79. The tax on a 12-pack of Coke cans will be $2.52. And a 2-liter bottle of Coke which used to sell at $2.79 is now $4. Diet and zero-calorie drinks are exempt.
“In addition to regular sodas like Coke, the tax applies to sport drinks such as Gatorade and energy drinks like Red Bull. The tax will apply to any nonalcoholic beverage or beverage concentrate that lists as an ingredient any caloric-based sweetener. For that reason, many juice-based drinks will be taxed.”
These taxes are absolutely ridiculous. It hurts both consumers and store owners alike. For example, “in Philadelphia, where a sweetened-beverage tax took effect this year, non-chain retailers have passed on 100 percent of the cost, according to preliminary research.” And for store owners who just happen to live on the edge of the city, shoppers are not changing their behavior — just their geography; they’ll shop across the border of Seattle, leaving those store owners now with products more expensive than their nearby counterparts across the city, which hurts their business.
These sin taxes are merely tax grabs for the government but do little towards changing the actual behavior they intend by the existence of the tax. The real effect is that people will shift their purchase to outside the city, which will eventually cause a tax decline for Seattle — as seen in currently in Philadelphia. Government does not seem to understand that people will actually go out of their way (literally!) to avoid paying illogical, egregious taxes.