Tax the Sugar Pushers

This is not your typical sin tax.

by Bruce Schimmel

Right before City Council's recent marathon session on taxing sugary beverages — the Coke Tax — I was at the dentist, being examined for the rot that sugar hath wrought.

Between pokes, I asked my dentist if there's anything much worse for your mouth than a Coke. "No," he said. "Should soft drinks be taxed?" I asked? "Sure. Because they're not food."

That's putting it nicely. Sugary drinks are like poison. They make people obese, set up heart attack and stroke, make kids wacky and are probably addictive.

Chicago already has a soft drink tax, and it's being considered widely as a revenue-raiser. Philly hopes to raise $77 million yearly, of which some $20 million will be used to put real food — fresh fruit and vegetables — into corner stores.

What's ironic about taxing sugary drinks is that the federal government actually underwrites the stuff they're sweetened with: high-fructose corn syrup. So we pay once to produce this crap, and pay again when people get sick. In effect, then, the city's tax would be recovering federal dollars wasted upstream.

From corn syrup to Coke to coronaries, the best way to disable this horrific system is not to hurt the victims, but to punish the perpetrators. To take away the pushers' profit.

And that's what makes Philly's tax unique. This is not your typical sin tax, where consumers pay a fee at checkout. Instead Nutter will tax the sellers of sugary drinks. Retailers will be charged 2 cents an ounce, based on how much they buy from suppliers. A 20-ounce Coke will cost retailers 40 cents more.

With the dealer being taxed, it's the dealer's choice. They could raise everything in the store, raise only the price of sugary drinks, or do something in between. And while it's conceivable that some merchants won't charge their customers more for sugary soda, one thing is certain: The city will still recover the cost of this harm, ounce by ounce. Whatever the retailer chooses, the taxpayer wins.

As for the sugar drinkers themselves, they're free to choose a store where corn syrup Coke is cheaper, or switch to Diet Coke, which won't be taxed. They could even buy a diet soda and add sugar themselves. Says so in the law.

Curiously, those most upset about Nutter's tax are the bottlers, who won't be taxed at all. In Council, Pepsi and Coke bottlers packed the chamber with truckers clamoring to keep their jobs.

The local Coke franchise is said to be among the country's most profitable. President Fran McGorry told me that this "unprecedented tax" would hurt sales in general and cost jobs.

But that's only if retailers do not offer someone looking for a corn syrup Coke the chance to buy a Diet Coke for less. Makes no sense. It's in the retailer's self-interest to encourage consumers to buy stuff they make more money on, not on heavily taxed drinks.

What I suspect is that bottlers make less if they don't sell subsidized corn syrup. And the beauty of Philly's "unprecedented tax" on merchants is that the bottling heavyweights can do little, except to scare workers into raising a ruckus in Council.

Sadly, some in Council seem swayed by the bottlers' brouhaha. In particular, Darrell Clarke and Maria Quinoñes-Sánchez need to put down their sugary soda, wait for the high-fructose buzz to subside, and think this through clearly. Because this is a good tax.

(bruce@schimmel.com)