Free Refills & Why I Love America Rotating Header Image

Soda Tax

Victory!

American sodaThe Philadelphia soda tax, which would have slapped a two cent per ounce tax on soda, juice and other sugary drinks, appears to be dead.

Needless to say, this is tremendous news as the soda tax as proposed would have almost certainly ended free refills in the city of brotherly love. It is time to drink a Super Big Gulp in celebration!

DON’T TREAD ON ME!

How would a soda tax affect Big Gulps?

7-Eleven’s Big Gulps and Super Big Gulps are one of the great things about America. And judging by the number of hits this site gets from people searching for information about them, they are something that Americans—or the small subset of Americans who wind up visiting this blog—really care about.

Of course the great thing about the Big Gulp is the, shall we say, visionary sizes it comes in. The Big Gulp itself is 32-oz, the  Super Big Gulp is 44-oz, the Double Gulp weighs in at an impressive 64-oz (2 l), and for the truly thirsty there is the 128-oz Team Gulp. (I’ve never seen a Team Gulp myself, but Wikipedia says it exists.) The Big Gulp line serves up soda in such massive quantities that they almost make free refills unnecessary. Of course for those patrons for whom 44-oz is not enough, most 7-Elevens offer reasonable 79 cent refills if you bring your cup back. They don’t offer free refills as they are a convenience store, and who stands around in a 7-Eleven and drinks 44-oz of soda?

But of course the Big Gulp’s very strength—its vast size—is also its weakness when it comes to the soda tax.

As Philadelphia’s proposed soda tax is written, merchants would have to pay a tax of 18 cents-per-ounce of soda syrup. Most soda mixtures call for one part syrup for every five parts of water. Here is what you’d pay in taxes on a typical Gulp product (assuming you didn’t use any ice).

Big Gulp: 32-oz, Taxes: $1.15

Super Big Gulp: 44-oz, Taxes: $1.59

Double Gulp: 64-oz, Taxes: $2.30

Team Gulp: 128-oz, Taxes: $4.61

So if passed, the Philadelphia soda tax would more or less double the price of Big Gulps and other Gulp products. And it would probably mean the end of the 79 cent refills—just as it would likely end free refills in restaurants.

The Philadelphia soda tax will mean the end of Free Refills

Philadelphia is on the verge of passing a sweeping soda tax that could herald the end of restaurants offering free refills for Philadelphians.

It’s a dark day indeed for the City of Brotherly love.

So far, most of the media coverage of the proposal focuses on the two cents per-ounce tax it would impose on bottled and canned sodas and other sweet drinks. This would increase the cost of a typical can or bottle of Coke by about 60 percent.  But little noticed in the legislation is an eighteen-cents-per-ounce tax on the syrup that restaurants use to mix coke. This tax would increase the cost of serving a fountain drink by between 100 and 350 percent.

To see how, let’s take a look at the cost structure of fountain drinks and free refills.

Restaurant industry blog Foodservice Friends estimates that the total cost of serving a 20-oz soda is about 22 cents.

Here is their estimate of how that cost breaks down:

Syrup for a 20-oz cup of soda (8.75 oz with ice): $0.12

20 oz foam cup: $0.07

Lid for cup: $0.01

Straw: $0.015

Total Cost = $0.215 or rounded up $0.22 per soda

The point here is not the specific figures, but to show that syrup is the primary cost in every soda restaurants serve. And this assumes you’re paying $50 for a standard five-gallon case of syrup. That price seems right for off-brand sodas, but is rather low for Coca-Cola or Pepsi, which typically run about twice that price and are likely to cost even more.

So if the restaurant offers free refills—as it should—the syrup used in each glass is pretty much the only cost the restaurant incurs (other than labor) for each refill.

But what happens if the Philadelphia soda tax is imposed? The price of syrup is tippled. The proposal’s eighteen cent per-ounce tax on soda syrup, which seems small, causes a huge spike in the price per cup. On a typical five-gallon case of syrup, there would be $115.20 of taxes—which would double the cost of name-brand syrup and more than triple the cost of off-brand syrup.

What would happen if each refill of soda cost a restaurant 35-50 cents instead of the 10-15 cents it costs now? Well, I can’t image they’d offer free refills for too much longer. Either that or the price of a soda would have to start at $5 to maintain profit margins.

So what can you do to help stop the free refills killing Philadelphia soda tax? Head over to savephillyjobs.com and sign their petition. Then call your representatives and tell them you oppose a soda tax—it’s a good idea even if you don’t live in Philly —because a soda tax may be coming to your town next.

What does a soda tax look like?

The folks over at SavePhillyJobs.com have posted a PDF of Philadelphia’s proposed soda tax law. You can check out the official document here, but I’ve copied the important sections below.

(1) Sugar-sweetened beverage. Any non-alcoholic beverage which lists any form of sugar, including high fructose corn syrup, as a listed ingredient; or which is prepared at the point of sale by mixing water with any syrup which lists any form of sugar, including high fructose corn syrup, as a listed ingredient; except that sugar-sweetened beverages shall not include baby formula. Sugar-sweetened beverages include, but are not limited to, soda; non-100%-fruit drinks; sports drinks; flavored water; energy drinks; and pre-sweetened tea. Sugar-sweetened beverages do not include unsweetened drinks to which a purchaser can add, or can request that a seller add, sugar, at the point of sale.

The Department of Public Health is authorized to promulgate regulations to clarify the inclusion or exclusion of particular products.

§ 19-3602. Imposition and Rate of the Sugar-Sweetened Beverage Tax.

(1) There is hereby imposed a tax on the privilege of selling at retail any sugar-sweetened beverage, including but not limited to sales of pre-packaged beverages, sales of fountain beverages, sales at restaurants, and sales from vending machines.

(2) The rate of tax shall be two cents ($.02) per ounce sold of pre-packaged beverage; and 18 cents ($.18) per ounce of syrup used for sales of fountain drinks; all subject to the following adjustments:

(a) The rate for each calendar year (or such other accounting year allowed by the Department) commencing on or after January 1, 2011, shall be certified by the Department to the Chief Clerk of Council no later than the immediately preceding December 15. The Department shall calculate the rate by multiplying the then-current rate by the CPI Multiplier. The CPI Multiplier shall equal the ratio of the most recently published Consumer Price Index for All Urban Consumers (CPI-U) All Items Index, Philadelphia, Pennsylvania, United States Department of Labor, Bureau of Labor Statistics (“CPI”), on December 15 to the most-recently published CPI on the immediately preceding December 15. The rate shall be expressed in dollars per ounce, rounded to the nearest one-ten-thousandth of a dollar (four decimal places).

A couple thoughts on this:

Two cents per-ounce is a whopper of a tax. It is twice the rate that has been floated in New York and at the national level. If implemented, this tax would add nearly 60 percent to the cost of your typical twelve pack.

The eighteen cent per-ounce tax on soda syrup would almost certainly mean the end of free refills in Philadelphia, as it will increase the cost of the primary ingredient in soda by between 100 and 300 percent (depending on if a restaurant serves brand name or generic soda).

The tax is indexed to inflation. So unlike beer, the tax burden will not decrease over time.

Although it is being sold as a soda tax, it is structured in such a way that it will apply to a wide-range of beverages from juice, to chocolate milk, to energy drinks, to fancy coffee-based beverages.

Soda companies show a united front [ads]

At my high school, the senior class was given the Coke machine as a fundraising tool. Seniors were responsible for paying the Coke supplier and keeping the machine stocked. As compensation, they got to keep all of the profits for the class.

Needless to say it was a gold mine–even at a small school with only 350 kids from 6th-12th grade.

The reason it was so profitable was because we kept it stocked with drinks that people enjoy, like Coke, Cherry Coke, Dr. Pepper and Sprite. If I recall correctly we only had one “Diet” option and stopped stocking Dasani water because it was always the worst seller. Instead we used that slot for, you guessed, more Coke.

This is all by way of saying that I’m a little bit sad that in face of growing criticism from ‘health advocates,’ Coke, Pepsi and Dr. Pepper announced they will stop selling full-calorie drinks in schools. Now it looks like everyone will have to drink “Diet Coke.” Back in my day, we only had one slot in the vending machine for that.

At least they put up a good “image ad” to tout the initiative.

“Rivals” TV Ad from American Beverage Association on Vimeo.

Vive Le Free Refills! [soda tax]

This is what I like to see: people standing up against the free refills-ending soda tax in Philadelphia. You can keep informed about the campaign to stop the soda tax by following savephillyjobs on twitter or by visiting their website.

It’s been defeated at the national level.

It’s been defeated in New York State.

Now it is time to defeat to defeat the soda tax in Philadelphia!

You can see more pictures of the rally here and follow our continuing coverage of the national soda tax debate here.

(Photo from Matt Petrillo)

New York soda tax dead… for now [soda tax]

Ottawa, Canada — March 2010 — At The Corner  1You can stop stockpiling Coke— at least for the time being.

The AP reports that Governor Patterson’s soda tax appears to be a non starter in the Senate.

A proposed new tax on sugary drinks appears unlikely to pass the state Senate, despite passionate campaigning by New York Gov. David Paterson and his health commissioner.

Supporters have pushed the tax as a way to combat obesity while bolstering funding for state health programs. But a number of Democratic senators are opposed, along with the entire Republican conference. With a 31-30 Democrat-Republican split in the chamber, the measure isn’t expected to draw the minimum 32 votes needed for passage.

Good news for the time being. But the food police types behind this tax are hoping that continuing budget woes are going to give them another shot at passing it.

Stay tuned.

A soda tax will hit your frappuccino too [soda tax]

New York isn’t the only place where politicians are pushing for a soda tax. Cash-strapped legislatures around the country are increasingly looking to soda taxes as a politically palatable way to raise funds under the guise of public health initiative.

Of course such a tax would hurt the poor most of all. But just because you tend to favor sophisticated coffee drinks over Big Gulps of Coke, doesn’t mean that a soda tax won’t impact you.

A recent story in the Philadelphia Inquirer had a great illustration of what exactly Philadelphia Mayor Nutter’s 2-cent per ounce soda tax would mean for your beverage of choice. Chocolate milk, fountain drinks, iced tea, even sweetened coffee drinks would be subject to the tax.

Like to drink a frappuccino in the morning? Better get ready to fork over an additional 20 cents for it. Soda taxes, it seems, will apply to Starbucks too.

Stock up on Coke, the soda tax is coming

Side of LifeThe New York Health Department is apparently ready to move forward with plans for a soda tax, according to a report in the New York Post.

“It’s time to get it done,” State Health Commissioner Richard Daines told the Daily News. “We’ve talked about it, the evidence for health benefits is getting a lot stronger, and the need for the revenue this year is definitely there.”

Daines is confidant the Legislature will pass the tax this year, setting an example for the rest of the country to follow.

A regressive tax that would threaten the very institution of free refills does not sound like a good example for the rest of the county to follow to me.

I still doubt this tax will come to pass, it is, after all, wildly unpopular. But it still might be a good idea to start stacking up on your favorite soda just in case it does in order to delay its impact on you.

Regular cans usually have around a 39 week shelf-life and probably taste good enough to drink for up to a year. A word of advice though, artificial sweeteners in diet drinks greatly reduce their shelf life and are sensitive to heat. So it’s probably a good idea to keep a good idea to keep your hoard limited to regular sodas.

The soda tax ad war [video]

A few weeks ago Governor Patterson proposed slapping a hefty tax on soda as a way to help address New York’s massive budget deficit.  A similar national proposal died last year after it proved about as popular as canceling Christmas. In New York, a recent poll found 60 percent of people oppose a tax on soda.

But the food-police types—who go by the name “Alliance for a Healthier New York”— seem to think they have shot at getting the tax passed. And to advance their cause, they’ve been on the air with a new television spot.

And here is the anti-tax ad from Americans Against Food Taxes.

As much as I hate to admit it, I think the pro-tax folks have a much better commercial. The mom in the no-soda-tax ad comes off as really angry. She kind of seems like that neighborhood mom that all of the kids on the block are scared of. The result, of course, is that she is a very poor messenger for a popular cause. At least that is my take.

Which ad do you think is more effective?

Related Posts with Thumbnails