Newfoundland’s pop tax is nothing more than a (hidden) tax grab

12-pack of Coke or Pepsi will be slapped with nearly a dollar in new taxes

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Jay GoldbergEverything Newfoundlanders put in their grocery cart is getting more expensive, and Newfoundland Premier Andrew Furey is about to hit one of their few affordable treats with a new hidden tax.

He’ll tell you it’s because he wants Newfoundlanders and Labradorians to lose weight.

But here’s the reality: it’s just another tax.

As of Sept. 1, Newfoundland and Labrador will be the only province in the nation to have a hidden tax on sugary beverages.

Furey’s new 20-cent per litre tax means your typical 12-pack of Coke or Pepsi will be slapped with nearly a dollar in new taxes.

Furey says this tax is all about health, but its design clearly demonstrates that this is nothing more than a tax grab.

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KEEP AN EYE ON NEWFOUNDLAND

 

The tax will be applied at the wholesale level. That means that when you go to buy pop at the grocery store in Newfoundland, the tax will be hidden in the price. Taxpayers likely won’t know exactly how much extra they’re paying due to the tax. That’s like getting caught speeding, but instead of giving you a ticket, the cop just adds the fine to your income tax bill.

It gets worse. Furey’s pop tax is a sneaky hidden tax, so you’ll also have to pay sales taxes on top of the new pop tax. That’s another 15 per cent on top of the pop tax itself.

Does a hidden tax with another tax layered on top sound like the right way to help people lose weight?

This tax grab gets even stranger the more you get into the details.

There’s also a good chance the price of diet pop will increase. If you’re picking up a fountain drink at the gas station, is the clerk really going to watch whether you’re putting regular or diet pop in your cup? It’s a good bet you will be paying the same higher price even if you pick a diet drink.

The tax is also arbitrary. If you’re at the grocery store and buy a two-litre bottle of chocolate milk, which has nearly 200 grams of sugar, you won’t be slapped with the sugary drink tax. But if you go for a two-litre bottle of Coke with almost the same amount of sugar, you will be.

What about treats that lead to even more sugar intake?

If you go to Dairy Queen and get a Cookie Dough Blizzard, you’ll be eating 146 grams of sugar. That’s far more sugar than your typical sugary beverage, yet the government isn’t trying to stop you from enjoying your ice cream.

These ridiculous nuances expose the sugary drink tax for exactly what it is: a tax grab.

Finally, evidence from abroad needs to be considered. Experiments with taxes on food in Hungary, France and Denmark have led to higher prices but no improvement in the body weight of the average citizen.

Mexico introduced a 10 per cent pop tax in January of 2014. The government claimed it was all about public health. But instead of going down, sugar-sweetened pop sales actually went up, rising in both 2015 and 2016. Clearly, the pop tax only had an impact on tax revenue, not health outcomes.

Despite evidence from around the world, Furey seems determined to soak Newfoundland and Labrador taxpayers with an ineffective tax.

The bottom line is that Furey is just after an additional $9 million in tax revenue.

Jay Goldberg is the Ontario & Interim Atlantic Director for the Canadian Taxpayers Federation.

For interview requests, click here.


The opinions expressed by our columnists and contributors are theirs alone and do not inherently or expressly reflect the views of our publication.

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Jay Goldberg

Jay Goldberg spent most of his career in academia, where he was most recently a policy fellow at the Munk School of Public Policy and Global Affairs at the University of Toronto. He holds an Honours Bachelor’s Degree in Political Science from the University of Toronto, and a Master of Arts Degree in Political Science from the University of British Columbia.

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