The city of Berkeley, California, has instituted a tax of a penny per ounce on naturally sweetened soft drinks, energy drinks and tea. The levy is expected to raise $1.2 million in its first year for the general fund.
Some of that money will be earmarked for wellness programs.
Not every person who drinks high-test Coca-Cola is fat, but some are, and now they have to pay for their sin. Shouldn’t that make Mike Bloomberg beam and inspire every wannabe nanny-statist to push for this wonderful tax?
Alas, not even tax revenue from fatties cheers up nanny-statists.
Two economists – one from Cornell, the other from the University of Iowa – studied how much of the tax was being passed along to consumers and concluded this social engineering isn’t going as intended.
“In light of the predictions of the proponents of the tax, as well as in light of previous research, we expected to see the tax fully passed through to consumers,” wrote John Cawley of Cornell in a National Bureau of Economic Research working paper. “In contrast, we find that less than half, and in some cases, only a quarter of it is. This is important because the point of the tax was to make sugar-sweetened beverages more expensive so consumers would buy, and drink, less of them.”
For Coke and Pepsi, the figure was the same – 22% of the tax passed on to the public.
This tends to prove what is already known, that the markup on soft drinks at places like Subway (Jared, ewwww) is ridiculous.
Aside from publications catering to the beverage industry and the Cornell Chronicle, this scholarly effort got little attention. That tends to prove it didn’t fit the narrative.