State governments love sin. Well, maybe not the sin itself, but they certainly love the revenue generated from so-called ‘sin taxes.’ The most heavily taxed vice involves tobacco products, which produced nearly $17 billion in revenue to state coffers in 2014, according the the U.S. Census bureau. Taxes on alcohol contributed another $6 billion and casino gambling raised around $5.573 billion for state governments. Those figures don’t include sums from state lotteries or state-operated liquor stores.
On tap for the foreseeable future: look for state and local taxing authorities to declare sugared soft drinks as a sin, and what better way to regulate a sin than by taxing it? The concept is already trending in a number of major metropolitan areas as governments attempt to combat obesity (and raise revenue) by imposing a tax on sugary sweet beverages.
As of January 1, 2017, Philadelphia implemented a 1.5 cent per ounce tax on drinks containing a sugar-based sweetener, such as natural cane sugar or high fructose corn syrup, but the tax also applies to drinks made with artificial sweeteners. The result is higher prices on many non-alcoholic beverages that consumers love. The effect on taxpayers could be dramatic as retailers must jack up prices to cover the cost. For example, a gallon of sweetened tea that cost $1.77 in December 2016 now goes for $3.69.
Philly is not alone in its quest for new sources of tax revenue…and in fighting obesity, of course. The City of Brotherly Love joins Boulder, Colorado and several California municipalities including San Francisco, Oakland, Albany and Berkeley in levying sin taxes on sugared beverages, and Illinois is mounting a statewide campaign for the tax.
The World Health Organization estimates obesity more than doubled worldwide between 1980 and 2014, affecting more than 500 million people. Will a sin tax on sugary sweet soft drinks help turn back the tide? Only time will tell. But targeting the global soft drink market with nearly $870 billion in annual sales is one way for state and local governments are looking to fatten up their coffers.