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Philly Mayor Blames Retailers of Soda Price Gouging

AlbqOwl said:
Glenn Beck, who we are stuck with for afternoon radio programming on our main station here, made a huge deal about this the other day. Personally I think the whole thing pretty dumb to get in a dither about, but then I don't drink much soda either. I figure the market will fix it because if nobody buys the stuff at high prices, the prices will either drop or they'll dump the tax.
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Sure, but thats not really the point. The lesson here is not to start these taxes in the first place.
 
CanadaJohn said:
The only logical reason for government to put an onerous tax on a consumer product is to drive down consumption of that product. It works, to some extent, with cigarettes and booze, the two historical "sin taxes" but attempts to put such a tax on snack foods has failed wherever it's been tried so far and the backlash from the public, like in NYC with Grandma Bloomberg's meddling, bites the instigators of the tax in the butt.

This is the same argument that is being peddled with carbon pricing/taxes - drive up fossil fuel costs to encourage moves to alternatives and/or simply reduce consumption of fossil fuels. Problem is, most people don't consider gas for their cars or a pop to be a vice the way the nanny state does.
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It doesnt work, it just encourages tax avoidance.

In New York, a Black Market For Illegal Cigarettes Thrives - WSJ

Ave's business is untaxed cigarettes smuggled in from other states, and he boasts he can sell 50 packs a night. "I go for shopping areas, wherever there's a large crowd," the 28-year-old says. "I make a good profit, enough to pay my bills."

New York has never lacked for streetwise entrepreneurs like Ave, but trafficking in cigarettes has exploded in recent months. It is attracting not just veterans like Ave -- who used to hawk compact discs -- but also amateurs seeking extra income.

Why the boom? Last summer, the city boosted its excise tax on cigarettes to an eye-popping $1.50 a pack, from eight cents. New York state also raised its levy, to $1.50 from $1.11. The combined $3-a-pack wallop makes cigarettes here the costliest in the U.S., at about $7.50 a pack. On the street, $4 to $5 a pack is practically irresistible.
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jonny5 said:
It doesnt work, it just encourages tax avoidance.
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Don't get me wrong - I believe you're right for the most part. There will always be those who skirt the law to make a buck. The same will happen and likely is happening in jurisdictions where pot is being legalized - there will still be lots of people selling illegal product at reduced costs. Here, cigarettes, booze and guns are big business for native reserves that border the US - they smuggle product over the border and sell it, tax and regulation free, for huge profits. And they're not the only ones.

My point was that government has no business placing an onerous tax on any product unless the goal is to reduce consumption. Most people won't participate in the black market for such consumption, so if the price gets too high sales drop. But from a tax revenue perspective, raising the taxes too much will only reduce government tax revenue either through a reduction in consumption or, as you point out, through alternative forms of purchase.

But I fundamentally have an opposition to governments raising funds on the consumption of certain products.
 
jonny5 said:
Sure, but thats not really the point. The lesson here is not to start these taxes in the first place.
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I can't argue with that. Back in the late 1980's and early1990's when George H.W. Bush broke his 'no new taxes' pledge and allowed Congress to put luxury taxes on the rich man's toys like high end private boats/yachts, private planes, high value jewelry etc., the fall out was disastrous. The rich simply went elsewhere to buy such things and our boat and plane manufacturing industries were decimated and the high value jewelry business was driven mostly off shore to places like Grand Cayman.

That tax was rescinded but too late to undo all the damage. Some of that has never fully recovered.

Soda that both poor and rich people buy is something different though so maybe it will discourage people from buying it or will encourage a bootleg industry or who knows what will happen. The rich won't be deterred by a high tax on soda though as it won't make that much difference to them. But lower income people probably will buy less of it.
 
AlbqOwl said:
I can't argue with that. Back in the late 1980's and early1990's when George H.W. Bush broke his 'no new taxes' pledge and allowed Congress to put luxury taxes on the rich man's toys like high end private boats/yachts, private planes, high value jewelry etc., the fall out was disastrous. The rich simply went elsewhere to buy such things and our boat and plane manufacturing industries were decimated and the high value jewelry business was driven mostly off shore to places like Grand Cayman.

That tax was rescinded but too late to undo all the damage. Some of that has never fully recovered.

Soda that both poor and rich people buy is something different though so maybe it will discourage people from buying it or will encourage a bootleg industry or who knows what will happen. The rich won't be deterred by a high tax on soda though as it won't make that much difference to them. But lower income people probably will buy less of it.
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But don'tcha know... rich people have plenty of money to burn and will just pay the tax.

/sarcasm off
 
AlbqOwl said:
I can't argue with that. Back in the late 1980's and early1990's when George H.W. Bush broke his 'no new taxes' pledge and allowed Congress to put luxury taxes on the rich man's toys like high end private boats/yachts, private planes, high value jewelry etc., the fall out was disastrous. The rich simply went elsewhere to buy such things and our boat and plane manufacturing industries were decimated and the high value jewelry business was driven mostly off shore to places like Grand Cayman.

That tax was rescinded but too late to undo all the damage. Some of that has never fully recovered.

Soda that both poor and rich people buy is something different though so maybe it will discourage people from buying it or will encourage a bootleg industry or who knows what will happen. The rich won't be deterred by a high tax on soda though as it won't make that much difference to them. But lower income people probably will buy less of it.
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Short term is works, but free people find alternatives. Look at vaping.
 
radcen said:
But don'tcha know... rich people have plenty of money to burn and will just pay the tax.

/sarcasm off
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I read a study one time that many, if not most, of the rich are rich because they don't live and spend like you would think rich people do. Most got rich by working hard, working smart, and by not giving in to desires for the latest gizmos and gadgets and by spending as little as they can get by with until they had it made. And yeah, they aren't going to spend hundred or thousands more for an American made product that they can get for much less elsewhere.
 
joG said:
So why would the mayor be unhappy? Politicians want xxxl to go away. Lots of people won't want to pay so much more. I wonder. Will they turn to beer?
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It's funny to see politicians trying to talk their way out of their own messes.

The other side of this is like what happened in my state a while back where they put a huge tax on tobacco and used that money to fund schools... only to be faced with torches and pitchforks when they had shortfalls in school funding because people weren't smoking enough.

I wouldn't have been at all surprised if the state had started promoting smoking ... but I think they decided to focus that effort on marijuana.
 
AlbqOwl said:
I read a study one time that many, if not most, of the rich are rich because they don't live and spend like you would think rich people do. Most got rich by working hard, working smart, and by not giving in to desires for the latest gizmos and gadgets and by spending as little as they can get by with until they had it made. And yeah, they aren't going to spend hundred or thousands more for an American made product that they can get for much less elsewhere.
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I believe Warren Buffet still lives in the house he bought a long time ago for about $30,000.
 
Moderate Right said:
I believe Warren Buffet still lives in the house he bought a long time ago for about $30,000.
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I wouldn't be surprised. I don't know a whole lot of really rich people, but the few I do know all live well and enjoy life, but they live much more modestly than you would think. It's mostly the suddenly rich people that seem to go for the huge mansions, elaborate estates, etc.
 
AlbqOwl said:
I wouldn't be surprised. I don't know a whole lot of really rich people, but the few I do know all live well and enjoy life, but they live much more modestly than you would think. It's mostly the suddenly rich people that seem to go for the huge mansions, elaborate estates, etc.
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I would include inherited money in that.

As a general rule, it seems those who worked long and hard are more modest.
 
radcen said:
I would include inherited money in that.

As a general rule, it seems those who worked long and hard are more modest.
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The 'suddenly rich' I think would include many, though not all, of those who inherit their fortunes but didn't grow up with it. A less rich person who comes into a lot of money quickly, I think is far more likely to want to know how it feels to live in a million dollar mansion, drive a luxury car, live the high life. So we see that phenomenon among movie stars and sports figures and lottery winners etc. They don't care what the price of soda is. They can afford anything they want.

Those born into wealth are far more likely to adopt the values of their parents or grandparents who worked to acquire that wealth and take a much more practical and economically modest view. $2.00 for a soft drink? They'll have water.
 
jonny5 said:
City puts a tax on soda. Businesses raise price of soda. No one saw this coming.

Then again, maybe this is exactly what govt wanted?
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Mr Person said:
hmmmmm...

Well, is the price increase per ounce, at retailers, equivalent to or greater than the tax per ounce applied to wholesalers? That would seem to be the beginning and end of it.
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Does no one want to address the key point here?

To simplify it a bit: if the increase of marginal cost for the manufacturer is less - especially significantly less given the word "gouging" - than the amount by which marginal price increased, then they did use the tax as an excuse to increase prices beyond what was necessary to account for the tax. AKA, "Price Gouging".

But if prices increased in reasonable proportion to the tax manufacturer, there may not be any price gouging, in fact, there probably isn't any.

And if they increased in direct relation to the tax, then they absolutely are not price gouged.






We can throw around all the words we want, but this one comes down to the numbers.
 
instead of The Boston Tea party they can have The Philly Syrup Party; dump it in the streets ............
 
The main folks that can't drive to another county or state is basically those buying sugary drinks at the sports stadiums.


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AlbqOwl said:
The 'suddenly rich' I think would include many, though not all, of those who inherit their fortunes but didn't grow up with it. A less rich person who comes into a lot of money quickly, I think is far more likely to want to know how it feels to live in a million dollar mansion, drive a luxury car, live the high life. So we see that phenomenon among movie stars and sports figures and lottery winners etc. They don't care what the price of soda is. They can afford anything they want.

Those born into wealth are far more likely to adopt the values of their parents or grandparents who worked to acquire that wealth and take a much more practical and economically modest view. $2.00 for a soft drink? They'll have water.
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Not sure of that. The maxim is usually that the first generation builds it.. the second generation grows it.. and the third generation blows it...

Seen that hold true a number of times.
 
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