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1 Courtney Shupert & Scott Drenkard, Soda Tax Experiment Failing in Philadelphia amid Consumer Angst and Revenue Shortfalls 1 (2017)

handle is hein.taxfoundation/sodatxph0001 and id is 1 raw text is: Soda Tax Experiment Fai ing in Philadelphia Amid Consumer Angst and Revenue Shortfalls FISCAL FACT No. 555 Aug. 2017 Courtney Shupert Research Assistant Scott Drenkard Director of State Projects The Tax Foundation is the nation's leading independent tax policy research organization. Since 1937, our research, analysis, and experts have informed smarter tax policy at the federal, state, and local levels. We are a 501(c)(3) non-profit organization. @2017 Tax Foundation Distributed under Creative Commons CC-BY NC 4.0 Editor, Rachel Shuster Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 202.464.6200 taxfoundation.org Key Findings: * Philadelphia's beverage excise tax is 1.5 cents per ounce, which is 24 times the Pennsylvania excise tax rate on beer. * The high tax rate on nonalcoholic beverages makes them more expensive than beer in some cases. Prior research on soda taxes suggests they are likely to drive consumers to more alcoholic beverage consumption. * Philadelphia's beverage tax applies to diet beverages, despite those beverages having no impact on caloric intake. * Beverage tax collections were originally promoted as a vehicle to raise funds for prekindergarten education, but in practice Philadelphia awards just 49 percent of the soda tax revenues to local pre-K programs. * Soda tax revenues are likely below expectations due to consumer mobility. Some soda consumers may drive out of town to buy groceries, rather than pay the higher taxes. * Poor revenue performance of Philadelphia's beverage tax threatens the sustainability of the programs it funds.