Taxes on foods and beverages are bad policy. They hit low-income families the hardest, they won’t make people healthier and they “reek of government paternalism,” says Abigail R. Hall Blanco, an assistant professor of economics at the University of Tampa.
In a blog post for the Independent Institute, Hall Blanco points out that the demand for beverages in Philadelphia is elastic, meaning that consumers have alternative options for buying their beverages. In this case, meaning other locations outside the city.
“Philadelphia isn’t located on a desert island. Want your soda without the tax? Go outside the city limits where the same products are easily available and the tax doesn’t apply,” says Hall Blanco.
She’s right. Philadelphia residents looking to escape the tax will do their shopping outside the city, hurting Philadelphia businesses. While they are shopping for beverages, they’ll probably pick up their other grocery items as well – which will be another blow to small businesses in the city.
For these reasons, Hall Blanco warns, “Most likely, Philadelphia, this tax is not a good move.”
