The Tax Foundation has a new report out chronicling how Philadelphia's recently enacted soda tax is "failing" from a public policy perspective. As a Wall Street Journal editorial notes, perhaps the most interesting side effect of the soda tax is that it is increasing demand for beer in the City of Brotherly Love:
"This is no surprise to anyone who knows the iron economic law that when you tax something you get less of it. In this case that means fewer soda sales...
The oddest twist is the beer boon. Pennsylvania’s excise tax for beer is eight cents a gallon, but in Philadelphia the tax on the same unit of soda amounts to $1.92, including on diet drinks. That means low-cost beer has a slight price advantage over soda for the thirsty.
This is also no surprise given that a 2013 Cornell study, “From Coke to Coors,” examined a small-town soda tax and concluded that while long-term soft-drink consumption didn’t diminish, ale purchases increased. We’ll await a future report on whether these trends continue, but other cities might note that excise taxes don’t repeal the laws of economics..."
Read the rest of the editorial here (paywalled).