Making People Poorer Is Not Good for Public Health

Oct 12, 2018

By Donna Smith

In January 2017, the city of Philadelphia imposed a tax on sugar-sweetened beverages, ostensibly in the name of public health. Politicians promised that the new tax would raise $92.4 million, which would be earmarked for public education and job creation initiatives. But while that might sound like a sensible proposal, the results have been anything but successful. The reality is that the beverage tax has come at a considerable cost for working class Philadelphians – leading to job losses, a decline in GDP growth, millions of dollars in lost income and local tax revenue, and no measurable improvement in public health.

Proponents of beverages taxes argue that without them, taxpayer money would be used to pay for higher health care costs incurred from a higher consumption of sugar. However, a beverage tax alone only forces people to consume less sugar if they have no other options. Studies have shown that when beverages are taxed, consumers will still buy other forms of sugary drinks (e.g. powdered mixes), or simply take their business elsewhere to shop in areas without this tax. So perhaps an unsurprising side effect of Philadelphia’s tax has been the surge in alcohol sales, as some beers have become cheaper than soda.

At their core, beverage taxes are regressive. They end up targeting the very people that can least afford it – working families and people of color who spend a larger percentage of their income on food and drinks for their families than their wealthier counterparts. Beverage tax proponents are aware of this, but they couch their proposals in paternalistic concerns about public health.

While we are in the camp of doing what we can to promote healthy living, what this position fails to recognize is that there is no public health benefit to making people a dollar poorer. Rather, regressive taxes pose a threat to public health among our most vulnerable citizens who, due to this tax, now face yet another economic challenge and remain trapped in a vicious cycle of poverty (which is linked to higher rates of non-communicable diseases).

Beverage taxes have also been a failure from an economic perspective. The Philadelphia tax has been disastrous for working people and small businesses – union reps have announced more than 100 layoffs thus far, with more to come, and local grocery store chain ShopRite recently announced that it needed to cut 300 jobs.

Furthermore, in the year since Philadelphia imposed its beverage tax, the city has repeatedly failed to reach its revenue targets. This has led lawmakers to lower their expected revenue projections by 15%. The revenue that is being collected  is also failing to reach the populations that need it most. Of the $78.8 million in revenue that actually was collected, the city redirected at least $62 million towards its own general fund, where it still remains unspent.

This financial mismanagement only compounds the problems that the beverage tax has created in the first place: working people who are paying a larger amount of their salaries for groceries, have lost their jobs, or had their wages cut are the same people who are being shortchanged by the city’s lack of funding for basic services like education and healthcare.

It’s no secret that Philadelphia’s beverage tax has a disproportionate effect on working families and people of color. While some claim we are saving from themselves, those in power  are using this regressive tax to create another obstacle for people who are already struggling to make ends meet, on parents who work two or more jobs to take care of their children, and working people who are already having to choose between groceries and paying their bills.

As the privileged and wealthy levy taxes on people who can’t afford them, and then tell them it’s in their best interests,  working people continue to struggle in Philadelphia and across the country with real problems like poor infrastructure conditions, inadequate school funding, healthcare access, and so much more.

While the health of our population is an incredibly important issue, mandating it in ineffective ways that further exacerbate the economic inequality in this country is not the solution to the problem. If public health is really the primary concern, the city of Philadelphia and communities across the country would be better served investing in real solutions like better nutritional education and better healthcare rather than simply trying to raise another dollar on the backs of people who can’t afford it.

We need a better healthcare system in the United States, taxing the poor is not the way to do it.

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