As Philly's soda tax is challenged, do 'sin taxes' really work?

Last January, Philadelphia implemented a sugar tax by adding 1.5 cents per ounce of sweetened drinks, including sodas, juices and some tea and coffee products. And today the tax is being challenged and the Supreme Court of Pennsylvania will hear oral arguments in the case of Lora Jean Williams et al. v. City of Philadelphia et al.

Other US cities – Berkley, Boulder, and Chicago – and countries – Mexico and the United Kingdom – have implemented similar taxes. These levies always produce controversies. Now that some time has passed since these laws were enacted, we can test some of the critiques originally posed by opponents.

"Sin taxes" don't modify behavior. "Sin taxes" are flat taxes levied to control what are deemed as behaviors which have disproportionately high negative impact on individuals and society such as gambling, smoking, and alcohol use. The concern for people's well being is bundled with the desire to increase government revenues. While no one is denying that tax revenue is the driving incentive for passing these laws, the behavior change portion is often debated. Looking at data recently published by Drexel University, it seems the tax might be working. Compared with neighboring cities without the tax, Philly consumed 40 percent fewer soda and 60 percent fewer sports drinks. It should be noted that the study, despite being controlled, had design weaknesses since it was a retrospective survey. The author also admits that the study was done very early – only two months after the tax began.

More interestingly, Mexico began federal sugar taxation in 2014. University of North Carolina at Chapel Hill economist Shu Wen Ng followed the trends for two years after and found up to a 12 percent decrease in consumption. That's quite convincing. The UK is about to start a similar program and had been curbing sugar use even before this. The British law is two-tiered so that more than 19 grams of sugar in 8 ounces is taxed higher than 12-19 grams. This has already caused soda makers to push the sugar content below 12 grams per can. To be fair, there hasn't been quite enough time to accumulate enough data to determine if these taxes work in the long run. However, models are optimistic, with at least one estimating that "Mexico's 10 percent tax on sugary beverages would prevent nearly 190,000 new cases of diabetes over 10 years." To be sure, only time will tell.

Sugar taxes are regressive. There are different views on this issue. All excise taxes are regressive because they're not adjusted for income. Some medical conditions, including obesity and the diseases it causes such as type 2 diabetes, heart problems and stroke are also "regressive." In other words, for folks who have little and live in neighborhoods with poor access to healthy food such as North and West Philly, high calorie, cheap foods are a part of reality. As a result, we see the well-documented higher rates of obesity in the poor. While obesity most critically affects those afflicted with it, the enormous healthcare costs obesity incurs affects everyone. Ultimately, the question may be political and philosophical: is it right to control other's habits for a perceived whole-society benefit?

The tax revenues will be used to make Philadelphian lives better. This is likely true if the funds are truly used to better the city. Used correctly, the soda tax money can be a way to "pay back" needy city dwellers whose pockets were affected by it. The Philadelphia tax was earmarked for city rebuilding projects and universal Pre-K. But a WHYY article from March reported "75 percent of the revenue generated by the tax has flowed into the city's general fund instead of being spent on programming." It went on to say that city controller is working on making sure the money gets to where it was intended in a transparent manner.

Political views aside, the initial evidence from other states and countries seems to point favorably towards sugar taxes. To be fair, the effect of such changes on a population should really be followed scientifically over longer periods of time. The initial data looks promising, but time will better reveal the true story. There is no doubt that obesity is a "top three" pediatric health concern in our country and medically speaking, one could argue that cutting sugar availability benefits all.

However, if one does examine these initiatives from a political perspective, many might feel that it's not the government's place to dictate consumption patterns and those voices deserve to be heard. Regardless of the tax's future in our city, any revenues collected should not be held up in the city's coffers where they can't be used for improving Philadelphian lives as promised.