Soda Tax Steals Jobs & Freedom – Lesson Learned

In June of 2016, the Philadelphia City Council approved a 1.5-cent-per-ounce tax on soda.  That tax increased the cost of a two-liter bottle of soda by roughly $1.00.


In a 13-4 vote, a government council ushered in the first-ever government-imposed soda tax under the guise that it will reduce obesity and help lift people out of poverty.


So, how’s it working out for Philadelphia?


Pepsi recently announced that roughly 20% of its work force in Philadelphia with be laid off.  


Why? Sales have decreased roughly 40% following the soda tax.  Consequently, Pepsi simply can’t afford to keep as many employees on the payroll.  According to company spokesman Dave DeCecco:  “The layoffs come in response to the  beverage tax…Unfortunately, after careful consideration of the economic realities created by the recently enacted beverage tax,we have been forced to give notice that we intend to eliminate 80 to 100 positions, including frontline and supervisory roles.”


And, Pepsi isn’t the only one losing money.  The soda tax was originally touted as a means to increase municipal funding, but now the city of Philadelphia will likely lose tax revenue.  Fortunately, the soda tax is under appeal and awaits an April hearing in court.  But, there’s a bigger issue at play.


Each time we allow government to influence our behavior, in this case by targeting our food, we lose more of our liberty.  Taxing food may initially seem like a good idea.  After all, it could lead to a healthier America by lowering the obesity rate.  And, it sounds better than the government banning food.  At least you have a choice, right?


Actually, taxing food is arguably worse than banning food because it’s sneaky.  Instead of outlawing a food, which could cause an uproar by consumers, the government slowly nudges us away from a particular food by providing market incentives, or disincentives in this case.  For instance, by increasing the cost of soda, government nudges us away from it.  It worked in Philadelphia.  Consumption decreased and Pepsi began pulling 12-packs and 2-liter bottles of soda from the grocery store shelves in Philadelphia because those sizes became too expensive following the soda tax.  People aren’t buying them.  If the soda tax remains, the government can slowly raise the tax level to nudge your behavior even further.  Eventually, you may not be able to afford the soda any longer.  But, at least you still have a choice, right?  There’s even a name for this strategy: libertarian paternalism.


The bottom line: Taxing food drives us further from a free market and closer to serfdom.  


Yet, “the people” are voting to impose food taxes on themselves! In 2014, voters in Berkeley, California approved the first tax on soda at the local level. In November of 2016, voters in Boulder, Colorado and three cities in California (San Francisco, Albany, and Oakland) approved a tax on sugar-sweetened beverages, like soda.


I wouldn’t be surprised if a soda tax becomes federal law in the near future.  After all, in 2015, the Dietary Guidelines Advisory Committee recommended the federal government impose a tax on soda and sugary snacks.  That’s the committee, composed of 11-15 “experts,” that advises both the USDA and Health and Human Services on what Americans should eat.  The recommendations of that group become the Dietary Guidelines, which dictate what all Americans (over the age of 2) should eat and is used to develop federal food and health policies and programs.


My point is: When will the nudging stop?  Where will the line be drawn?  Who should decide what is “good” for you and what is “bad” for you to eat and drink?


Clearly, if that decision is left to the government then we’re all in trouble. 


What You Can Do:

Don’t vote for food taxes.

And, don’t support representatives who vote to tax our food.



Assisting Personal Responsibility: Using Nudges to Reduce Sugar Consumption

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