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Soda tax update: Philly and Chicago

August 10. 2017 10:40PM

The premise of the American political system, with power divided among the federal, state, and municipal governments, is that each city and state can function as a laboratory of democracy.

Sometimes, the lab catches on fire. But this is still a useful lesson for everyone else.

In Philadelphia, the plan to raise money for schools and parks by taxing soda and other sugary beverages is not working out. Mayor Jim Kenney said last year that the purpose of the soda tax was not to discourage soda consumption, but to raise money.

Predictably, thirsty Philadelphians are buying less soda in the city, though they may just be stocking up in the suburbs. Revenues from the soda tax are $6.7 million below projections through the first six months of this year, leaving a city pre-kindergarten program and city parks underfunded.

Meanwhile, Chicago officials have failed to learn from Philadelphia’s failed experiment. Cook County last week instituted a penny-per-ounce tax on soda, in addition to the Chicago sales tax, and an existing Chicago soda tax. Consumers end up with an effective tax rate of nearly 50 percent on a 12-pack of soda. Stores and restaurants are having all sorts of problems figuring out which drinks should be taxed.

New Hampshire is no stranger to sin taxes. But Philadelphia and Chicago have shown that adding a tax on soda would be a bad idea.

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