The Economic Advisor

The Soda Tax Increase Could Be Helpful I Think

Lately there has been much chatter on network television about the government enacting a tax on soda.� Personally I don’t really care because for one the government is bleeding so much red they need money.� Also soda is a guilty pleasure of us Americans, we love it and we won’t stop drinking a Coke or Pepsi anytime soon.� Besides I think pop is a product we consume so often at such a cheap price we as consumers probably wouldn’t really notice a price increase too much in the first place.� Now you might be thinking that this guy doesn’t care or he doesn’t understand how taxes work.� However, I do understand enough about taxes that I feel I can’t be “strong armed” into making any bad decisions regarding taxes.�

The first area I want to dive into about this tax hike on soda is into what I call our “guilty pleasure”.� As Americans we know overtime cigarettes can kill you, we know if you eat McDonald’s everyday you will get fat and we know that having a high credit card bill can keep you in debt.� However we still do all the above. This is why I think this tax could be useful because it’s a guilty pleasure.� Having pop at almost every place we go to we are used to having, it’s almost like we subconsciously need it.�

The next reason for a tax increase in soda is simple, we won’t notice the increase all that much anyway.� A 20-ounce pop will run $1.50 where I live.� It used to be $0.99 all the time and now it’s fifty cent higher and no one is complaining about it.� I argue that at this higher price we consume even more pop then what we used to at one dollar.� I believe even if we had a fifty-cent increase in price we might gripe for a few months but after sometime we will be used to it and it won’t matter anymore.�

The last reason is that the sheer volume of sales that beverage companies produce is absolutely enormous.� That volume alone I know already produces billions in revenue for the government why not try and get more.�

As a whole a tax increase on soda might make some cringe at the beginning but overtime it will be beneficial because most people won’t notice the increase after a while and because it can help to generate even more revenues for the government.�

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