Philadelphia's tax makes soda more expensive than beer, study shows



It may be cheaper for thirsty Philadelphians to reach for a beer than a soft drink, thanks to the city's so-called "soda tax," and that might not change anytime soon.

The latest study from the Tax Foundation, an independent tax policy research group, found the city's excise tax on sugary beverages has in some cases made drinks like soda more expensive than beer and that it may not be raking in the cash city officials envisioned. Soda revenues have lagged, and the shift has pushed some residents to leave the city to buy groceries, according to the study's authors.

The tax went into effect at the start of the year and slaps a 1.5 cents-per-ounce tax on sugary and diet beverages. That's 24 times Pennsylvania's excise tax rate on beer and covers a range of beverages, from soda and energy drinks to some teas and fruit juices.

The tax is levied on distributors, but some grocers have passed it on to drinks. This means a 12-pack of store-brand root beer costing $2.99, rings up as $5.15 because of the added $2.16 in tax, according to a previous study from the group.

The organization also found that a 12-pack of Propel energy drink in one Philadelphia store costs $9.03 with the added $3.04 tax, while a 12-pack of Icehouse beer goes for just $7.99 after the beer tax is applied. And that estimate is conservative, as the Propel was discounted when researchers did a cost comparison.

Other cities have fought for a similar tax, but they typically frame the provision within health policy, often as part of the fight against obesity. Philadelphia bucked the trend, passing the tax as a revenue-raising measure.

City officials intended the money to go toward a number of programs, including pre-kindergarten programs. But just less than half of the nearly $39.5 million collected since the tax went into effect on Jan. 1 has gone to education funding, according to the study.

Overall, the city may have overestimated the tax revenues, as soda tax collections have reportedly settled below the original projections of $92 million per year, or $7.7 million per month. The study's authors suggest the city missed its mark because of higher prices, fewer purchases and tax avoidance.

Researchers found Philadelphia's hard-won tax has met with legal battles and has made for uneasy consumers and retailers, issues that may not be easily remedied.

"Despite constituent support for the programs funded by the tax, the actual revenue for programs remains unstable due to poor collection performance, with potential that those revenues will continue to fall," according to the study. "The legal battles and consumer angst the tax has attracted make the tax unattractive as well. "

Copyright 2017 U.S. News & World Report

Should I Include a Dependent's Income on My Tax Return?

It may be easier and less expensive to include dependents' income on your tax return rather than have them file their own return—in certain circumstances.

Read More

Brought to you by TurboTax.com

Great Ways to Get Charitable Tax Deductions

Generally, when you give money to a charity, you can use the amount of that donation as an itemized deduction on your tax return. However, not all charities qualify as tax-deductible organizations. While there are many types of charities, they must all meet certain criteria to be classified by the IRS as tax-deductible organizations. There are legitimate tax-deductible organizations in many popular categories, such as those listed below.

Read More

Brought to you by TurboTax.com

Tax Tips After January 1, 2019

TurboTax gives you ten tax saving tips for the new year. Find strategies to lower taxes, save money when preparing your tax return, and avoid tax penalties.

Read More

Brought to you by TurboTax.com

Should You and Your Spouse File Taxes Jointly or Separately?

Married couples have the option to file jointly or separately on their federal income tax returns. The IRS strongly encourages most couples to file joint tax returns by extending several tax breaks to those who file together. In the vast majority of cases, it's best for married couples to file jointly, but there may be a few instances when it's better to submit separate returns.

Read More

Brought to you by TurboTax.com
Read Full Story