What the Soda Tax Can Teach us About the Budget

The high costs of Philadelphia's soda tax are mounting by the week. The Philadelphia Inquirer is reporting a 30-50 percent drop in beverage sales for some supermarkets and distributors. The drop in sales have employers talking about significant layoffs.

Jeff Brown, whose company manages six ShopRite stores, painted a sobering picture of how the tax has affected his employees:

Since January, Brown said, he has had to cut 6,000 employee hours…He said he suspects he will lose about 300 people, which amounts to one-fifth of his total workforce voluntarily and through layoffs in coming months.

What's all this have to do with Harrisburg?

Gov. Wolf's 2017-18 budget proposal mirrors Philadelphia's tax-and-spend approach. The governor is proposing more than $1 billion in tax hikes to pay for sizable increases in state spending. 

The governor defends his tax hikes by asserting his proposal “doesn’t raise taxes on people.” That sounds eerily familiar to Mayor Kenney's promises that the soda tax would be paid by distributors, not consumers. Mayor Kenney is blaming greed for the higher prices and layoffs, revealing a fundamental misunderstanding of how taxes affect workers.

In reality, a benign tax that was supposed to help fund pre-k and make Philadelphians healthier is putting people out of work and raising the cost of groceries. 

Philadelphia’s mistake should serve as stinging reminder that tax hikes—no matter how seemingly inconsequential or justifiable—can hurt many of the people who can least afford to pay.

We need to look beyond tax hikes and address the real problem in our economy: Decades of red tape and uninterrupted transfers of wealth to government, both of which have diminished economic opportunties for working Pennsylvanians.

Gov. Wolf has put some good ideas on the table, but it's not enough. State government has to embrace innovation and leave the failed policies of the past behind.