According to the New York Post, The controversial fat tax Gov. Paterson hopes to resurrect in budget talks this week could hike the price of powdered drink mixes such as Kool-Aid, Gatorade, and iced tea by nearly double.
Whenever the tax on sodas was first proposed, we predicted that it would cause consumers to buy other sweetened beverages, says ACSH s Jeff Stier. The problem is that the industry and individuals are generally pretty clever when it comes to getting around government efforts to regulate their personal behavior. So if they tax soda, people will buy sugary powdered drinks instead, and if they tax those, people could just buy unsweetened powdered drinks and add their own sugar. Where does it end?
Two illustrative examples of this are in the airline industry. Senator Schumer doesn t like the fact that airlines are charging fees for carry-on luggage, and he wants to regulate them. Of course, the airlines will just raise the ticket prices across the board if they eliminate the fee, and then those people who don t have carry-on luggage will be penalized. Also, some in the federal government got upset that people had to wait in planes on the tarmac too long, and have developed regulations that stiffly penalize airlines for doing so. Now, the airlines just increase the posted flight times to build in the delays and avoid the penalty.
