While no state has a state-wide soda tax at this time, all 7 U.S. cities that have enacted one have a tax structure that places the burden of the tax on the distributor. This increases the cost to companies like Coca-Cola and Pepsi to sell their product and passes off some of the burden in a cost increase to the consumer.
Businesses in these areas are already feeling the strain from the soda tax as exampled by Jeff Brown, owner of a now-closed ShopRite in Philly. Brown cites the Philly soda tax as the reason behind closing the doors of one of his stores, and says revenue has dipped by 20 percent.
“So the customers have a lot of choices outside the city where they can avoid this tax,” Brown said. “They voted with their feet.”
Delaware would likely witness a similar scenario, where consumers would make the short trip across state lines to purchase cheaper products. Moving profits out-of-state will harm businesses and the communities they serve– just like in Philadelphia.
These initiatives also place a disproportionate burden on lower income families, who consume more sugary drinks on average. Low income individuals also staff the jobs that are at risk of being impacted by these initiatives, proving the measure to be dually burdensome to this population.
According to the Tax Policy Center, this method of taxation is most beneficial if the goal is to increase tax revenue, but not to encourage healthy behavior. So why are Delaware legislators considering a soda tax?
Chicago and Santa Fe have already repealed their soda taxes after opposition from constituents, business owners, and companies distributing in these areas. In Philadelphia, the tax has fallen short of revenue projections and has dropped beverage sales by 51%.
If this measure has been less than successful in the cities it has been tested in, our legislators should avoid testing it across our entire state—at the detriment of Delaware families, communities, and businesses.