Taxes and black markets

Rachel Thomas at Stuff reports:

The US city Philadelphia introduced a tax on sugar. A black market in soft drinks followed. Rachel Thomas visited for Stuff’s ‘Sugar Fix‘ series.

A crate of Pepsi is wedged up against an arm rest between the front seat and the back.

Underneath is a box of Mountain Dew, then more Pepsi shoved underneath a seat.

This, claims union man Danny Grace, is evidence of Philadelphia’s black market for sugary beverages.

Grace is secretary-treasurer of the Teamsters – many of whom drive for Coke and Pepsi – and his members send him these photos when they spot the vans around the city.

A sandwich and a soda is an institution in Philadelphia, much like the famed Philly cheese steak, “but now the soda costs more than the sandwich”.

He produces more photos – white vans, number plates, crates of Coke bottles, an orange drink called Sunkist, and a man in a white shirt with a piece of paper in his hand, standing next to crates of Coke and Red Bull.

Unregistered drivers are taking white vans to untaxed suppliers – such as Walmart – outside the city and buying in bulk, then selling the products to retailers in the city for cash, Grace says.

Again this is no surprise. When taxes on a product become excessive or even significant, the black market will flourish.