Monday, February 16, 2004

Coffee tax?

Upon stumbling across my blog, Jeff of Spookyhorse gave me the advice, "Don't become a slave to the blog!" Apparently I have been following that advice a little too closely lately...

Well, tonight Global News ran a CNN piece about a new form of taxation that has been discussed in the States, and more recently up here in Toronto. Seems a while back, Seattle tried implementing a ten-cent cappucino tax. It ran into widespread opposition, though, and was never put in place — but since then, New York City has taken notice. It's now trying to put in place a ten-cent latte tax to help solve its budget woes, and it sounds as though it'll run into a similar level of opposition.

The interesting thing is, I first heard about this idea on Friday, in a story aired on 680 News (another Rogers-owned media outlet), where the New York example was noted — and apparently Toronto is now considering its own 10-cent coffee tax. In a decidedly unscientific poll, they sent a reporter out on the street, where the response was remarkably supportive.

This is particularly surprising, because it seems to be a tax for revenue's sake only. Gas taxes can be argued to pay for infrastructure, or environmental costs due to automobile use (I know that's a broad statement about a touchy subject). Similarly, cigarette taxes act as a deterrent to smoking, and allow the government to collect funds that (at least indirectly) help pay for the health system. A coffee tax doesn't really deter behaviour that uses limited resources like road capacity or electricity, or that causes societal or environmental damages -- unless perhaps you count the litter of thousands of paper Tim's cups.

I'd be interested to find out how much this would generate for the city. Assuming the equivalent of 1 in 5 Torontonians orders one coffee a day, that's about $50,000 per day, or about $18 million per year. Compare that to a toll of the Gardiner and DVP. The last proposal I heard involved a toll equivalent to a TTC cash fare ($2.25), applicabale inbound only. I believe the traffic volume is about 150,000 vehicles per day coming in on each of the Gardiner and DVP. Cut that in half (150,000 total -- tolls inbound only), and then let's assume that 25% are diverted or choose to make different trips (112,500). Apply a $2.25 toll: roughly $250 million per day.

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