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The Pepsi challenge

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Illinois

* The Southern Illinoisan takes a look at the proposed sugary drink tax…

As frequent retailers themselves, [John Rains, executive vice-president and general manager of Pepsi Mid-America in Marion] said, schools might also feel the sting.

“Schools rely on businesses in the area to support a lot of their programs and businesses won’t be in a position to be as supportive,” he said. “And the schools themselves if they’re going to (use the products) for resale are going to be taxed.”

Overall, Rains said he would prefer legislators to focus on spending.

“Rather than continue to put burdensome taxes on the consumers, they need to look at running the state in a more professional and businesslike manner,” he said. “You just can’t tax, you have to look at how you’re spending money.”

Easier said than done, John. My advice would be to either suggest ways to cut spending or increase revenues, because this tax is most definitely in the mix.

posted by Rich Miller
Wednesday, Jan 18, 17 @ 10:16 am

Comments

Schools were hit with required changes to their pop machines six years ago. Most do not offer regular soft drinks anymore with the exception of concession stands which are generally operated my booster groups.

So the impact of a sugary drink tax on schools will be much less than it would have been 10 years ago.

Comment by JS Mill Wednesday, Jan 18, 17 @ 10:19 am
I agree with Pepsi. Let’s stop spending tax dollars on Pepsi products in schools.

Comment by OkComputer Wednesday, Jan 18, 17 @ 10:19 am
‘Schools might not sell as much soda to children’ does not seem like a winning argument.

Comment by Free Set of Steak Knives Wednesday, Jan 18, 17 @ 10:20 am
==Overall, Rains said he would prefer legislators to focus on spending.==

But, presumably, he doesn’t mean cutting education funding.

Comment by Arsenal Wednesday, Jan 18, 17 @ 10:22 am
I don’t understand the concept, schools would get more money from tax revenue than from Pepsi, what the heck was his point?

I don’t disagree with the concept of looking for ways to cut spending, just not sure what the heck his point was.

Comment by Ahoy! Wednesday, Jan 18, 17 @ 10:22 am
–“Schools rely on businesses in the area to support a lot of their programs and businesses won’t be in a position to be as supportive,” he said. “And the schools themselves if they’re going to (use the products) for resale are going to be taxed.”–

Really, this obtuse gibberish is all you got? “Pop tax hurts schools?”

Dude, you need some help on messaging.

Comment by wordslinger Wednesday, Jan 18, 17 @ 10:22 am
Does this include the “professional and businesslike manner” of cutting spending by reducing the amount of food in a package but keeping the same convenient price?

Comment by Past the Rule of 85 Wednesday, Jan 18, 17 @ 10:23 am
Okay then, how about we cut EDGE, River EDGE, Historical Preservation Tax Credit, Enterprize Zones and anything else that siphons off tax money before it gets to the coffers.

End Corporate Welfare

But the won’t. Instead they will start wearing

Austerity
Whispered sexy voice “because someone has to pay for it”

Comment by Honeybear Wednesday, Jan 18, 17 @ 10:34 am
A soda tax (or sugary drinks tax) is a very bad idea. “What’s taxed next” is a legitimate question as this tax is easily conflated with all sorts of other (supposedly) unhealthy or unwise food/beverage/lifestyle choices.

This tax is regressive too and again aims to penalize the least capable of absorbing the tax.

This easy idea, a lazy one really,is bad policy which will be excused by planners who know better and only want the best for us. #1984

Comment by Deft Wing Wednesday, Jan 18, 17 @ 10:38 am
You guys all missed his point. “It’s for the children”. /s

Comment by Out Here In The Middle Wednesday, Jan 18, 17 @ 10:38 am
Yeah, let’s just drastically slash critical social services. Sounds like a better place to scrounge for cash than in the wallets of people who choose to buy sugary drinks.

After all, the beverage industry’s biggest gripe about this (publicly) is that it’s “regressive”. That’s not strictly wrong, but in terms of overall utility, poor folks are going to be harmed a lot more if the hundreds of millions from a proposed beverage tax instead have to come out of social services and education spending.

Comment by Anonymous Wednesday, Jan 18, 17 @ 10:40 am
JSMill - I think schools still have loads of ‘juice’ in their pop machines, which are just as sugary as pop. So, I’m guessing that he’s assuming the juices will be subject to the tax as well (and they should). So, he’s saying that taxing those juices will cause the cost to increase, which would reduce overall sales.

Given the improvement in student health from drinking less juice, even if schools lose a small amount of money, it’s a net victory.

Comment by jerry 101 Wednesday, Jan 18, 17 @ 10:47 am
The army that will line up against this will be less than modest. It’ll pass. The biggest problem is that it will in fact become a self fulfilling prophecy and the revenue will steadily decrease…just as it was designed to do.

Comment by A guy Wednesday, Jan 18, 17 @ 10:56 am
==This tax is regressive too and again aims to penalize the least capable of absorbing the tax.==

Actually, the “least capable” (ie those on food stamps) will not pay the tax because food stamp purchases are non-taxable. That includes soda.

Cook County’s soda tax goes into effect 7/1/17. If the state passes a soda tax as well, folks going to the Jewel in Chicago to buy a 12-pack on sale for $2.50 will end up paying $5.60.

Comment by City Zen Wednesday, Jan 18, 17 @ 11:05 am
While this may not be popular with many, in my opinion this is a good direction to go to help fight obesity in our young school children. We hear debate that PE is being forced upon our school districts by Springfield, and that Districts should drop exercise for our youth because it’s just too expensive. We send a mixed message by allowing/condoning kids drinking mountain dew and other soft drinks.
Kudos for an attempt that would both discourage their use in our schools and then also generate needed taxes. They’ll get plenty of pop at home.

Comment by Gobblers Knob Wednesday, Jan 18, 17 @ 11:06 am
I’ve come around to supporting the sugary beverage tax. Big sugar has had a pass as public health costs related to sugar consumption has soared. In fact, recent reports show that they have fudged data to dodge the blame for the many health issues associated with sugar. This is not different than other sin taxes such as alcohol and tobacco. High school kids won’t be able to drink as much Pepsi? Good!

Comment by phocion Wednesday, Jan 18, 17 @ 11:11 am
Me. I gave up Oreos when they moved to Mexico so they can be produced at a $1.50/hr.and bought back into this country tax free. Now, i drink one diet DP a day and have to pay a sin tax. Old Blue knows who committed the sin.

Comment by Blue dog dem Wednesday, Jan 18, 17 @ 11:18 am
The problem about complaining about this being “regressive” is that those same people tend to panic when the notion of a truly progressive income tax is mentioned. You don’t want a regressive soda tax? Fine. Let’s make up for it by taxing the Rauners of the world at a rate that makes sense.

Comment by Anonymous Wednesday, Jan 18, 17 @ 11:21 am
=Actually, the “least capable” (ie those on food stamps) will not pay the tax because food stamp purchases are non-taxable. That includes soda.=

Did not realize that. Wonder if the projections for revenue take that into account?

Comment by m Wednesday, Jan 18, 17 @ 11:22 am
Need to keep Pepsi out of schools: Coke is much better tasting….

Comment by downstate commissioner Wednesday, Jan 18, 17 @ 11:38 am
Just had lunch at 17th street. Award winning bbq. Washed it down with a half gallon of SWEET tea. Going to confession right now.

Comment by Blue dog dem Wednesday, Jan 18, 17 @ 11:47 am
Shopping at a discount grocery chain, I picked up a two liter bottle of soda for a good price $0.79. Although I rarely look at cash register receipts, this time I did. The soda cost $1.14 with the Chicago sales tax included, which taxes soft drinks at a different rate. That was $0.35 in taxes on an item that cost less than one dollar. The Cook County soft drink tax does not kick in until summer. Now, Illinois is mulling over a tax on soft drinks too. Across the country in Pennsylvania, Philadelphia consumers are enraged at the higher cost of soft drinks and the tax raising politicians are trying to lie and blame the grocers for gouging the customers. The people are being gouged, but not by the vendors.

Comment by W Flag Wednesday, Jan 18, 17 @ 11:50 am
I must admit that I pictured Ray Charles signing the majority of Rich’s post and Mr. Rains’s statements.

Comment by Team Sleep Wednesday, Jan 18, 17 @ 11:54 am
Will that white chocolate mocha or frappuccino blended coffees at Starbucks also get taxed? They are probably just as bad and contain twice as many calories versus a can of pop.

In all seriousness, this soda tax is just about revenue. The State has no money and needs to find the next ‘bad’ thing to sell a tax increase especially now that the cigarette tax revenue is much lower now. They sell the tax as a way to combat obesity, but it won’t do that. It won’t make people eat healthier. It won’t get people exercising or even changing their habits to move more during the day (i.e. take the stairs up 1 flight vs the elevator or walk vs drive to the store a couple blocks away). Yes, it will lower the consumption rate and therefore will reduce the daily calories consumed, but studies have shown that people will likely just find other ways to replace these calories. Once the consumption rate drops, revenues will drop and the tax will increase again until they need to find a new source.

http://news.wisc.edu/research-finds-soda-tax-does-little-to-decrease-obesity/

Maybe rather than getting rid of recess and P.E. in schools, they should bring them back and get kids learning to love to play outdoors, play sports, and teaching them healthy habits at a young age. Otherwise, they will just get a jump start on being sedentary most the day like a typical office job and they will most likely come home from school and be couch potatoes playing video games.

Comment by SKI Wednesday, Jan 18, 17 @ 11:58 am
=I think schools still have loads of ‘juice’ in their pop machines, =

You are right, but the sizes are limited by law, so not as much of a hit.

I would guess, and it is only a guess, that they law may exempt schools since we do not charge sales tax either. But it is only a guess.

Comment by JS Mill Wednesday, Jan 18, 17 @ 12:05 pm
I’m with David Brunori’s assessment of a previous soda tax proposal http://www.taxhistory.org/taxcom/taxblog.nsf/Permalink/SDAD-9KYH5Y?OpenDocument

Comment by Regnad Kcin Wednesday, Jan 18, 17 @ 12:20 pm
I am glad I live by Missouri. Just another item to add when buying gasoline there.

Comment by Commuter Wednesday, Jan 18, 17 @ 12:23 pm
They should add a tax to all unhealthy drinks and food. If the product has less than 30% nutritional value, tax it.

Comment by Mama Wednesday, Jan 18, 17 @ 12:32 pm
City Zen,

My understanding is that the tax is on the distributors and not the final customer which means it will be built into the retail price, not added on as a tax. Food stamp recipients will have to pay this increased cost like everyone else.

Comment by Pelonski Wednesday, Jan 18, 17 @ 12:53 pm
“=Actually, the “least capable” (ie those on food stamps) will not pay the tax because food stamp purchases are non-taxable. That includes soda.=

Did not realize that. Wonder if the projections for revenue take that into account?”

I would assume projections are based on current tax income from products in this category, so it would exclude pop purchased with food stamps.

Comment by Montrose Wednesday, Jan 18, 17 @ 1:10 pm
So what is the tax on a case of beer vs the pop tax proposal????? both are bad.

Comment by scott aster Wednesday, Jan 18, 17 @ 1:54 pm
Pelonski - I know Cook County explicitly stated their soda tax would not apply to SNAP benefits to purchase beverages. You’re right that the state soda tax might be different.

But that adds an interesting layer of confusion. If the retailer pays the tax, can they still legally pass that cost on to SNAP recipients? And, if not, how would they recoup that cost?

But if the soda tax is legally embedded in the cost, all you’re doing there is funneling federal tax dollars in SNAP benefits to the state-level.

Comment by City Zen Wednesday, Jan 18, 17 @ 2:17 pm
Looking at Senate Bill 9, the tax is on the distributor. It also states the distributor must add it to the selling price to the retailer and the retailer must pass this through to the consumer as a component of the retail selling price. It also states they can separately list the tax. There is no mention of SNAP benefits or other exemptions besides sales out of state and sales for resale to another distributor so it will apply to soda sold to SNAP recipients, unless someone determines a federal exemption applies. That’s possible, but since the tax is on the distributor, not the use of the SNAP benefits (at least directly), it isn’t immediately clear to me whether or not that is likely.

Comment by Pelonski Wednesday, Jan 18, 17 @ 3:37 pm
A consumption tax is the cornerstone of GOP fiscal policy.

Comment by Anonymous Wednesday, Jan 18, 17 @ 5:46 pm
In Cook County, the soft drink tax (tax calculated per ounce) passed by a narrow margin with Preckwinkle casting the deciding vote.

The tax was sold as being on soda pop, but a closer reading of the ordinance suggests that it also will apply to juices, teas, flavored water, and sports drinks.

Comment by Super Big Gulp Wednesday, Jan 18, 17 @ 6:14 pm
Commuter -
While you’re at it, why don’t you pay Missouri income taxes and register your vehicles there.

Comment by Smitty Irving Wednesday, Jan 18, 17 @ 6:58 pm