No policymaker in good conscience should consider new sugary-drinks taxes after years of watching those taxes fizzle out across the country. Having taken the evidence into account, steps taken to make sure those mistakes don’t happen again – as legislators in Arizona are now doing – is the right course of action. Taxpayers would be lucky to see them never enacted again.
Sugary drink taxes are often implemented as a means to fight obesity and boost local budgets, but in reality, these taxes are remarkably regressive and an unreliable source of tax revenue. They add costs to vulnerable taxpayers, create complexity for businesses, and there’s no evidence that they lead to better health outcomes.
That’s why it was stunning to see a recent poll that found nearly 60 percent of Arizona residents would support a beverage tax if the revenue is allocated for education. It is universally agreed that adequate education funding is a societal priority. However, the costs associated with a beverage tax will far outweigh its possible benefits.
Arizona taxpayers should look at what happened last year in Cook County, Illinois, which encompasses Chicago. A sample of stores in the county reported between a
6 percent to 39 percent drop in sales, leading many small independent businesses to lay off employees or be at risk of closing their doors for good. After immense backlash by residents and a staggering 85 percent of voters in opposition to the tax, the government voted to repeal it after only 71 days of it going into effect.
The situation is not much better in Philadelphia, where they too intended to use this tax revenue to fund expanded education programs, but their tax continues to miss its revenue targets. In fact, for fiscal year 2017, the city collected 15 percent less than what was expected. Local businesses are also feeling the pinch of less in-store revenue. Some distributors have cut 20 percent of their staff, and small businesses like convenience stores have either let employees go or have slashed hours for their remaining employees.
Whether the tax is in Cook County, or Philadelphia, or in Arizona, the results will be the same: less money in the pockets of taxpayers, ticked off voters, and fewer jobs for those who want to work.
Proponents of beverage taxes often argue a higher priced good will encourage consumers to purchase alternative options. Yet “alternative” doesn’t necessarily mean something healthy. People who are denied a sweetened-beverage are more likely to substitute it for sugar found in another form to escape the tax. A recent study by health economists found beverage taxes do little to lower overall obesity rates. They even noted the diabetes rate in Ohio increased despite including soda in their statewide sales tax.
Thankfully, the Arizona Legislature is taking the initiative to raise the bar for local lawmakers to tax food and beverages. Introduced by Rep. T.J. Shope, HB2484 prohibits the taxation of a single product. So while it is possible taxes could still be raised on soda or other beverages, this bill requires the tax be applied to all food and beverage products equally. Taxes across all food and beverage products is fair and consistent, and makes it less appetizing for lawmakers to actually raise taxes.
Earlier this month, HB2484 received bipartisan support and near unanimous passage out of the House Ways and Means Committee. The Legislature should quickly consider this legislation to ensure its swift signing into law.
Taxpayers across the nation have felt the draining effects more taxes have on their wallet and their community. Another tax is not the responsible nor reliable method to fund Arizona’s education system. Taxpayers should urge their elected officials to support HB2484 and defend lower-income families, local businesses, and thousands of hard-working Americans.
— Thomas Aiello is the policy and government affairs associate at the National Taxpayers Union.
The views expressed in guest commentaries are those of the author and are not the views of the Arizona Capitol Times.