Philadelphia Soda Tax Forces Local University To Hike Student Costs By $400,000

Students at Temple University in Philadelphia, or perhaps their parents, are getting a great lesson today on the real life economic consequences of liberal political policies run amok.  Courtesy of Philly"s new 1.5 cent per ounce "soda tax", Temple has been forced to hike it"s 2017-2018 boarding costs by $400,000, or roughly 4.8%.  Per Philly.com, Temple"s CFO said they will roll back the planned $400,000 meal plan hike if the soda tax is repealed.

Board rates will rise an additional 4.8 percent for 2017-18 solely because of the 1.5-cent-per-ounce sweetened-beverage tax, which went into effect this year, the university said. The tax was enacted to help fund parks, recreation centers, and early childhood education. Heated debate over it continues, with PepsiCo having announced planned layoffs and retailers reporting steep losses.

The total impact of the new tax is estimated to be $400,000 per semester, said Ken Kaiser, Temple"s chief financial officer. The university will roll back the board increase if the tax is repealed, he said.

"This is another example of the damaging impact this tax is having on Philadelphia families," said Anthony Campisi, a spokesman for Ax the Philly Bev Tax Coalition, made up of a number of Philadelphia businesses and residents, many of them involved in the soda industry. "It’s ironic that a tax the mayor sold on the basis of expanding educational access is now going to be making higher ed less affordable for students."

Of course, Philadelphia"s Mayor, who has come under fairly constant attack for the controversial tax, said that Temple is simply using his legislation as a scapegoat to "pay for their ever-growing administrative salaries and new, expensive buildings and amenities."

"The beverage tax is becoming a popular scapegoat for unpopular decisions," said spokeswoman Lauren Hitt. "Universities across the country have been raising meal-plan fees because families are increasingly chafing at tuition increases, and universities still want to pay for their ever-growing administrative salaries and new, expensive buildings and amenities."

"Temple"s own administration staff has grown by 40 percent in recent years; they are planning to build a multimillion-dollar stadium; their new 24-story dorm includes flat screen TVs; and, sure enough, they have a history of raising their meal-plan fees to cover those costs - by 2.5 percent in 2015 and 4.3 percent in 2014."

As we pointed out a couple of weeks ago, when Philadelphia became the first US city to pass a soda tax last summer, city officials were eagerly looking forward to the surplus-tax funded windfall to plug gaping budget deficits (and, since this is Philadelphia, the occasional embezzlement scheme). Then, after the tax went into effect on January 1st we showed the tax applied in practice: a receipt for a 10 pack of flavored water carried a 51% beverage tax. And since  PA has a sales tax of 6% and Philly already charges another 2%, the total sales tax was 8%. In other words, a purchase which until last year came to $6.47 had overnight become $9.75.

Then came the layoffs as soda sales slumped as much as 40% forcing Pepsi to lay off 80 to 100 workers at three distribution plants that serve Philly. And since Pepsi only employed 423 people in the city, it meant that as much as 20% of its employees were suddenly out of a job due to a disastrous ordnance that was meant to provide additional municipal funding and instead will now lead to an increase in unemployment, coupled with a general decline in consumption, not to mention tax revenues for the city of Philadelphia.

A spokesman for Pepsi said "The layoffs come in response to the  beverage tax, which has cut sales by 40 percent in the city...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."

But not to worry, we"re sure Philly students can just take out more student loans to cover these increased costs...we certainly wouldn"t want them to have to divert any portion of their student loans that they"ve already set aside for Cancun.

Illinois Lawmakers Consider Massive, Regressive Tax Hike On Low-Income Families (a.k.a "Soda Tax")

To our complete lack of surprise, lawmakers in the State of Illinois are considering following in the footsteps of Philadelphia by imposing a 1 cent per ounce "soda tax" on all sugary beverages.

And while it"s being done under the guise of "improving public health," precisely zero people believe that the Nanny State of Illinois cares about the sugar intake of its residents.  Of course, the real motivation behind the so-called "soda taxes" springing up in liberal bastions across the country is the $100"s of million of tax dollars than can be generated to help them grow the Nanny State even bigger.

Lets look at a quick example of how the tax dollars add up.  Lets say, just for fun, that the average person consumes one, 12 ounce, sugary beverage (soda, juice,  etc.) per day.  That would equate to roughly a $45 annual tax per person (12 ounces x 365 days x $0.01 per ounce).  Multiply that by a family of 4 and the annual tax per household is $180 or roughly 30 bps of the median Illinois household income of $60,000. 

And while that doesn"t sound like much, and obviously it was designed that way, the numbers are staggering when you start to consider the statewide revenue potential.  Applying the the $45 per person annual tax from above to Illinois" 13 million people implies that the total revenue potential for state coffers is $585mm.  And, before you ask, while we understand that most infants aren"t drinking a can of Dr. Pepper on the reg (although we are talking about Chicago so who knows), we also guess that most teenagers are drinking more than one sugary drink per day so just go along with our rough math here.

Of course, as the Daily Caller pointed out, Philadelphia residents have been shocked by the impact of the soda tax on their grocery bills.  And even though Mayor Jim Kenney would like for you to believe that local businesses are responsible for the cost of a 12-pack of soda doubling overnight, we suspect most Philly voters are slightly smarter than that.

Consumers are in shock at price hikes on sugary beverages across Philadelphia due to a Soda tax that took effect Jan 1, and now the mayor is blaming increased costs on businesses.

Mayor Jim Kenney, who lead the charge for the passage of the tax, is lashing out at the business community over higher prices, even alleging retailers of attempting to stir resentment for the tax in the community. Kenney is accusing retailers of price gouging, purposefully constructed to undermine the tax and the efforts of the local government. Retailers who are charging the tax as a separate line item or who are putting up signs specifically highlighting the cost of the tax to the consumer, are engaging in an attempt to “mislead” shoppers and are “wrong,” according to Kenney, reports CBS Philly.

The contentious soda tax secured passage in June but consumers in Philadelphia are still flabbergasted by the price increases the tax is sparking. In some cases, shoppers found that they were paying more for the soda tax than the actual product they are purchasing.

Some residents said they are going to start shopping for their beverages out of the city to avoid the onerous tax. The mayor continues to defended the tax, arguing it is the choice of the retailers to pass the added costs onto their customers, deflecting responsibility. Prices are as much as doubling on certain products due to the tax. A 12-pack of Lipton Diet Green Tea at a Save-A-Lot in the city is now priced at $8.03, instead the $4.99 it costed in December.

Meanwhile, as we pointed out back in November (see "Startling Look At How Much Money Food Stamp Recipients Spend On Junk Food"), food stamp recipients spend over $350 million per year on "soft drinks."  So, lets assume conservatively that people pay, on average $1 per 12 oz can of soda.  That would imply that food stamp recipients are consuming 4.2 billion ounces of soda per year which means that $42mm of your federal tax dollars could be going to fund soda taxes in a Nanny State near you in the not too distant future...enjoy that thought over you long weekend.