Comments due by March 11, 2017
Philadelphia supermarkets and distributors say beverage sales have dropped 30 percent to 50 percent after the city instituted a 1.5-cent-per-ounce tax on sugary and diet drinks. On one hand, these are the same people who want to get the tax repealed, and we don’t have hard numbers yet, so take this with a grain of salt. On the other hand, the whole point of the tax is to reduce consumption of stuff that will kill you anyway, so … good job?
- If the goal is to raise tax revenues, will an increase in the tax increase, or decrease tax revenues?
- Tax revenues will increase if demand is inelastic and decrease if demand is elastic.
- If the goal is to decrease sugar consumption, how effective will an increase in the sugar tax be?
- It looks like consumers might be price sensitive, so an increase in the tax might be pretty effective at reducing sugary drink consumption