Soda Taxes Make the Poor Poorer, Maybe Fatter

Brief Analyses | Taxes

No. 831
Monday, August 01, 2016
by John McDonald

Philadelphia Mayor Jim Kenney recently approved an ordinance imposing a 1.5¢ per ounce tax increase on sugar-added and artificially sweetened soft drinks, including diet sodas, in an attempt to curb obesity.

According to the U.S. Centers for Disease Control and Prevention, the City of Brotherly Love is one of the most overweight areas in the United States:

  • In 2011, more than two-thirds (67.9 percent) of adult Philadelphians, and 41 percent of 6-to-17-year-olds, were overweight or obese.
  • Specifically, 35.7 percent of adults were overweight and 24.4 percent were obese.
  • Notably, 24.2 percent of adults surveyed had not done any physical activity in the past 30 days.

The tax will increase the price of each 12 ounce can of soda by 18¢, and the price of a 12-pack by $2.16 [see the figure]. The tax will not apply to baby formula, products that contain more than 50 percent milk, fresh fruit or vegetables, and unsweetened drinks that require the buyer to add sugar. Mayor Kenney wants to use the projected $91 million revenue to expand prekindergarten programs, create community schools, improve parks, recreation centers and libraries in poorer neighborhoods, and give tax credits to businesses that sell healthy beverages.

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