Minority leaders in Philadelphia speak up against the soda tax

As the Consumer Choice Center has been keen to point out in several articles and campaigns, additional taxes and levies on sugary drinks end up being regressive and hurting the very people they aim to help: minorities and the poor.

Now, minority leaders in Philadelphia, seeing the toll the taxes have had in their communities, are calling on the city to repeal them.

As reported in the Philadelphia Inquirer, black clergy leaders say the taxes are disproportionately hurting African Americans and the poor in the city.

“I don’t see how the tax, as it is constructed, can really effectively do what it is intending to do. We think it needs to be repealed and reconceptualized,” said the Rev. Jay Broadnax, president of the Black Clergy of Philadelphia and Vicinity.

Last year, Cook County, which includes Chicago, got rid of its unpopular 1-cent-an-ounce soda tax that its commissioners passed in November 2016 affecting 5.2 million residents.

The Philadelphia pastor said the 1.5-cent-an-ounce levy on sugary beverages, including diet soda, was having unintended consequences by saddling people of color, the poor and senior citizens with higher grocery bills, while dips in soda sales were hurting small neighborhood business owners.

“The way that it has worked out is that it seems to be hurting more than it’s helping,” Broadnax said.

When Philadelphia passed its soda tax in 2016, it was the largest U.S. city to implement such a fee. After the tax was implemented, shoppers chose to cross the city limits to purchase their sugary drinks, something we have also seen in places like Seattle and Chicago.

Former New York Mayor Michael Bloomberg, the architect of soda tax campaigns across the country, spent over $1.6 million in Philadelphia alone to help pass the tax. During that year, he also dropped $18 million in Oakland and San Francisco.

As I pointed out in my Washington Examiner article last year, Bloomberg is no doubt driven to do good. But whether soda taxes are the tool to help reduce obesity remains to be seen.

Though Bloomberg’s project represents a noble goal – reducing childhood and adult obesity – its actual impact is to make already low-income people poorer, and hasn’t yet produced any clear results on obesity.

In the case of Mexico, the largest jurisdiction which passed a tax on sugar-sweetened sodas in 2014, it’s quite clear that sales of sodas dropped as a result of the tax.

However, as Mexican researchers learned once they broke down the figures, low-income households paid a higher proportion of the soda taxes overall.

This likely means that soda taxes deterred higher-income individuals from buying and consuming soda, but not lower-income individuals: those who the government was originally trying to help. What’s more, it seems those who stopped purchasing sodas switched to alternatives with just as many calories, such as fruit juices or energy drinks.

That would mean the tax was at best a source of revenue for the national government, and at worst, a fierce killer of local shops and commerce.

An economic survey of the effect of the tax found that more than 30,000 Mexican stores which sold sodas were forced to close in the first half of 2016.

In Washington State, campaigners were successful in passing a ban on local grocery taxes. In large measure, this ban will ensure localities cannot pass their own taxes on ordinary goods Americans purchase at the store: meats, beverages, produce, dairy, grains, and more.

As such, Washington residents should be both proud and relieved. They won’t be seeing their grocery bills climbing any time soon, and that’s because they voted with their wallets on Election Day.

Whether policymakers at the city level will see the harmful effects of passing such taxes, however, remains to be seen. If they listen to the leaders in Philadelphia and other jurisdictions, they will think twice.

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About Yaël Ossowski

Yaël Ossowski is a journalist, activist, and writer. He's currently deputy director at the Consumer Choice Center, and senior development officer for Students For Liberty. He was previously a national investigative reporter and chief Spanish translator at Watchdog.org, and worked at newspapers and television stations across the country. He received a Master’s Degree in Philosophy, Politics, Economics (PPE) at the CEVRO Institute in Prague. Born in Québec and raised in the southern United States, he currently lives in Vienna, Austria.

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Bill Wirtz is policy analyst for the Consumer Choice Center, based in Brussels, Belgium. Originally from Luxembourg, his articles have appeared across the world in English, French, German, and Luxembourgish. He is Editor-in-Chief of Speak Freely, the blog of European Students for Liberty, a contributing editor for the Freedom Today Network and a regular contributor for the Foundation for Economic Education (FEE). He blogs regularly on his website in four languages.

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Ending sugar protectionism will help boost small business and benefit consumers

This week in the nation’s capital, the House Agriculture Committee will decide the fate of various agricultural subsidies and food benefits for millions of Americans.

The bill, H.R. 2, known as the Farm Bill, includes provisions on crop insurance, dairy prices, wetland conservation, Supplemental Nutrition Assistance Program (SNAP) adjustments, and dozens of other rules and regulations on commodities.

Tucked within this massive bill is a continuation of the U.S. Sugar Program, a decades-old government program that effectively sets prices for sugar, guarantees cheap loans for domestic sugar producers, and keeps out foreign competitors. It’s sugar protectionism, through and through.

As I mentioned in the Washington Examiner some months ago, this program has the unintended consequence of raising the costs of sugar for various small businesses, and passing those costs on to consumers.

The consequence of that multi-decade arrangement, however, has been higher costs for consumers and domestic businesses that rely on sugar as a base ingredient for their products.

According to the American Enterprise Institute, users and consumers of sugar lose out to the tune of $2.4 billion-$4 billion a year. That directly hurts the thousands of small businesses that rely on sugar’s low prices.

Now that the Farm Bill is set to be voted on in the committee, legislators have a chance to alter this program that has proven to be a huge burden to small businesses and consumers.

Key to this will be the Foxx Amendment, proposed by U.S. Rep. Virginia Foxx from North Carolina. This amendment would shrink the U.S. Sugar Program from its current size to a more moderate version. It wouldn’t go so far as scrapping the program, but it would make necessary changes that would better benefit consumers and American businesses that rely on affordable sugar.

In an op-ed with Americans For Tax Reform President Grover Norquist, Foxx makes the case for reforming the U.S. Sugar Program and slimming down sugar protectionism once and for all.

But the sugar program costs some Americans more than higher grocery prices: it costs them their job. As the U.S. International Trade Administration found, the program kills three manufacturing jobs for every sugar-producing job that it protects.

Let’s look at a few painful examples. The Spangler Candy Company reports, “Today, we have about 150 people making candy for us in Mexico. In 2017, Spangler had 900 people apply for jobs at our Ohio factory. I would love to offer 250 of them a job as a candy cane maker, but our government insists that sugar processing jobs are more important than manufacturing jobs. They are picking winners and losers and our town has been the loser for many years now.”

The Atkinson Candy Company moved 80 percent of its peppermint-candy production to a factory in Guatemala that opened in 2010.

And the makers of President Reagan’s favorite candy, Jelly Belly, had to build its new 50,000-square-foot plant in Thailand thanks to the high sugar price driven by U.S. policy.

The evidence is overwhelming — this is an expensive and damaging special-interest giveaway and it must be stopped.

As Foxx and Norquist demonstrate, the current sugar program forces small, family-owned food companies to pay twice as much for sugar as the rest of the world. It restricts how much domestic sugar can be sold, and how much sugar can be imported from other countries.

That’s a huge blow to consumer choice, not to mention an indirect tax to small businesses that rely on sugar for their products.

According to the U.S. Census Bureau, the sugar program killed 123,000 jobs between 1997 and 2015. The U.S. Department of Commerce reports that for every sugar-processing job subsidized through artificially high U.S. sugar prices, three American manufacturing jobs are lost.

In response, Foxx introduced her own bill to tackle the program and modernize it. The Sugar Policy Modernization Act of 2017, introduced back in November, currently has 80 co-sponsors but remains stuck in the House Agriculture and Ways and Means Committees.

The Farm Bill will take precedence, and thus focus will now be on the Foxx Amendment to make the needed changes for America’s domestic sugar policy. If legislators want to help prop up American consumers and small businesses rather than Big Sugar, they would vote to reign in the sugar protectionism in the Sugar Program.

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About Yaël Ossowski

Yaël Ossowski is a journalist, activist, and writer. He's currently deputy director at the Consumer Choice Center, and senior development officer for Students For Liberty. He was previously a national investigative reporter and chief Spanish translator at Watchdog.org, and worked at newspapers and television stations across the country. He received a Master’s Degree in Philosophy, Politics, Economics (PPE) at the CEVRO Institute in Prague. Born in Québec and raised in the southern United States, he currently lives in Vienna, Austria.

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