Effective January 1, 2018, the City of Seattle has started to impose a new tax o

Question

Effective January 1, 2018, the City of Seattle has started to impose a new tax on the distribution of sweetened beverages. The tax is 1.75 cents per fluid ounce. The following beverages are excluded from the tax: Any beverage in which natural milk is the primary ingredient. Any beverage for medical use. . Any liquid sold for use as a meal replacement or weight reduction. .Infant or baby formula. . Alcoholic beverages. Any beverage consisting of 100 percent natural fruit or vegetable juice with no added sweefener. . Any concentrate that the consumer combines with other ingredients to create a beverage. . Any beverage that contains fewer than 40 calories per 12-ounce serving. . Sweetened medications such as cough syrup, fever reducer and similar products. The City of Seattle wants to avoid calling this a sales tax or an excise tax. My questions to you are: 1. Why do you think it is so important for the City of Seattle to avoid calling this a sales tax? 2. Do you agree with this new tax? Why or why not? 3. What do you think the consequences to the ultimate consumer will be?

Explanation / Answer

1. Not sales tax

It is not a sale, excise, or, use tax on the consumption, sale, gross receipts, or, use of sweetened beverages. It is a general excise tax on the privilege of conducting business in the city. It is imposed on the act of distributing sweetened beverages in Seattle.

2. Agree or disagree with the new tax

Consumers, store owners, and, the beverage industry workers oppose the tax. These drinks have been linked to hypertension, type 2 diabetes, dental decay, and, heart disease. The revenues will provide low-income families with vouchers to buy vegetables and fruits, at grocery stores & farmers' markets. One can agree with the tax as it promotes a healthy lifestyle. Seattle's Fresh Bucks education & nutrition program will receive funding from revenues collected through the tax.

3. Consequences to the ultimate consumer

The ordinance does not prohibit distributors from increasing the prices; it is a private business decision. It does not prohibit a person from passing on the expense of the tax howsoever the sweetened beverage distributors deem appropriate. The tax is to discourage consumers from buying drinks, while also raising revenue for education programs, and, nutrition. Consumers are opposing the tax.

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