Seattle Washington’s New Morality Tax: $10 on a $15 Case of Gatorade?

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Liberals love to control people’s lives including what they eat and drink, and their latest example of insanity is their new morality tax on sugary drinks.

Seattle has thrown its residents a 1.75 cent per ounce tax on all sugary beverages within the city with the hopes of raising a $15 million revenue stream that it will use for programs to help people “have better access to fresh fruits and vegetables,”

City officials say they want to force “consumers to go for healthier options.” There’s more than a few problems with the new tax scheme, which a sign right next to the Gatorade in Costco helpfully demonstrates.

The price of Gatorade Frost Variety Pack at Costco, usually $15.99, with the $10.34 tax, shot up to $26.33, leaving customers with sticker-shock.

Ironically, if they get everyone to switch away from sugary drinks or it won’t be able to collect that $15 million it’s hoping for. That’s why using the tax code to punish or reward behavior is tragically short-sighted.

As with all excise taxes, this one is easily avoided: customers can visit Costco stores in nearby Tukwila or Shoreline and skip paying the City of Seattle’s Sweetened Beverage Tax. Customers are less likely to make extra inconvenient trips if the price changes are barely noticeable–but with such a steep price change, many residents will likely take the extra trip.

The position the tax advocates take is oddly contradictory, as Scott Drenkard of the Tax Foundation summarized on Twitter:

“First they interview people at the Costco who are rightfully shocked at how high prices on soda and sports drinks are now (they are almost doubled). Then they interview a public health advocate who says ‘that’s right! We want these prices to change people’s behavior and slow sales!’ Then they talk to the consumer, ‘think you’ll change your behavior, maybe even shop somewhere else?’ And she’s like, ‘ya the Tukwila store is close enough.’ Then they ask a city council member if this will hurt local [business], who says ‘there is no data’ suggesting that. Then the SAME public health advocate says that people won’t respond to price increases, shopping elsewhere because it isn’t ‘worth their while.”

Government attempts to disincentive certain behavior often have subversive effects. The point of these policies is to drastically reduce usage; but while the pricing cuts demand, it also fuels smuggling and black markets.

That’s exactly what happened in Philadelphia when similar taxes were introduced. In New York, these types of sin taxes led to stratospheric taxes on cigarettes. That created an underground black market in “loosie” cigarettes.

Tragically, police enforcement of the tax also led to the death of Eric Garner on Staten Island, who died in police custody after allegedly resisting arrest.

This tax had failed everywhere it’s been tried. People will just go to the nearest town that doesn’t have this tax, and buy their soda, plus all their other groceries there. Grocery stores in Seattle will ultimately be the losers.

If you do not drink what we tell you, and drink what we deemed unacceptable, you will pay. We will tell you what you want, we will decide everything for you. Don’t think, just do as we say. We have assumed control, we have assumed control, we have assumed control….

It’s not the government’s place to make these kind of decisions for us. It’s up to the individual to make this decision.

“Sin Taxes” are so called because they are levied on those commodities, such as tobacco and alcohol, which are the objects of widespread disapproval.

“Such taxes,” Paul Samuelson, American economist and the first American to win the Nobel Memorial Prize in Economic Sciences, says, “are often tolerated because most people–including many cigarette smokers and moderate drinkers–feel that there is something vaguely immoral about tobacco and alcohol. They think these ”sin taxes“ stun two birds with one stone: the state gets revenue, and vice is made more expensive.”

“Sin Taxes” is not a technical term in economics. They are simply a form of excise tax. What, then, is an excise tax? It is a tax levied on some but not on all commodities. This is how it differs from the general sales tax, which is levied on all products (with certain minor exceptions). This means that it is levied in addition to the sales tax. Excise taxes have a long history. Remember the infamous salt tax under the French monarchy?

There was the notorious tax on tea which was levied in the American colonies, which led to the Boston Tea Party and prepared the way for the American Revolution. Students of American history will recall the Whisky Insurrection, which occurred during the administration of George Washington. This rebellion grew out of resentment over an excise tax on whisky.

 

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