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Seattle’s Soda Tax Takes Effect — With Predictably Bad Results

Seattle’s newly implemented tax on sugary beverages has been making headlines around the country this week — and not for reasons its proponents had hoped. This was to be expected. Unlike the Santa Fe, N.M., which allowed its liberal constituency to vote on its proposed sugar tax and was soundly rejected at the ballot box, Seattle opted to force this tax on its residents without giving them any say. The Seattle City Council (which is made up of eight registered Democrats and one registered socialist) passed the tax by a 7-1 vote back in June.

And now that the soda tax has been implemented…sticker shock has set in. You won’t believe how much the cost of beverages such as Gatorade, iced tea, lemonade, and soda has risen as a result of this punishing fee. Check out some of the posts on social media:

The outrage over this huge tax hike was entirely predictable. As Fox News reported:

The tax, which went into effect Jan. 1, slaps an additional 1.75 cents on each fluid ounce of sugar-sweetened drinks, a group that includes soda, sports drinks and kombucha.

That’s nearly double the one-cent levy the Chicago-encompassing Cook County tried, a tax it repealed after about two months.

But the sticker shock now facing city residents is merely the first shoe to drop, revealing the damage caused by the city’s leaders. The second shoe? When residents find out that city leaders misled the public on the amount of revenue the tax will generate and the amount of additional public services they would benefit from. PJ Media reports:

[City leaders] held a press conference to make the simultaneous points that the new tax will generate $15 million in new revenue for the city…

If Cook County’s soda tax prophesied the shock-and-awe now facing Seattle residents, it also foreshadows the future revenue-miss that will inevitably hit the city. The Chicago Tribune reports:

Costco’s nine Cook County locations saw a 34 percent decline in sales of beverages affected by the tax, said John McKay, chief operating officer of Costco’s northern division.

The chain saw a corresponding increase of 38 percent in sales of sweetened beverages in its nine stores just outside Cook County…

The highly predictable outcome of this sugar tax is that more consumers will do their grocery shopping outside of Seattle, and the city will not meet the pie-in-the-sky revenue projections they sold to the public. Philadelphia’s beverage tax failed to generate the revenue officials touted, and Seattle’s experience will be no different.

Plain and simple: soda taxes are bad for your wallet and bad policy. Shame on Seattle’s City Council for foisting this regressive tax on its residents.

Photo credit: Vox Efx via Flickr, CC BY 2.0

Jonathan Decker

Jonathan Decker is the Chief Economic Correspondent for TheNationalPulse.com.