Reference no: EM131616959

Sunday, the city began imposing a 1.5 cent per ounce tax on the supply of sweetened beverages to retail dealers, which is supposed to go towards quality preK, Community Schools, and better parks, libraries and rec centers. 

Among the items taxed: regular and diet sodas, and also teas. The tax is also levied on syrups and concentrates used to make sweetened drinks. And drinks considered "zero calorie" are also taxed. 

The tax will be paid by distributors of sweetened beverages, but certainly passed on to customers. 

According to the city, a distributor is any person who sells sweetened beverages to a dealer, and a dealer is any person who sells sweetened beverages at retail. Dealers include delis, restaurants, and grocery stores. 

For them, the tax will be due the 20th of each month for the prior month. That means the first payment will be due February 20, 2017, for distribution activity in January 2017. 

The 1.5-cent-per-ounce tax amounts to 18 cents on a 12-ounce can of soda or $1.44 on a six-pack of 16-ounce bottles. Two cities have soda or soft drink taxes but more than 30 cities and states have rejected them. 

On Dec. 19, Common Pleas Court Judge Gary S. Glazer rejected the lawsuit challenging it filed by the American Beverage Association and others. 

Lawyers for the beverage industry tried to block the tax, arguing it duplicates the state sales tax already imposed on soda and unfairly taxes drinks based on their size, not price. 

But Shanin Specter, of Kline & Specter, PC, representing the plaintiffs in the beverage industry's lawsuit against the city, issued this three-word statement: "We shall appeal." 

Read the above article, then answer the following questions, including explanations and working, and diagrams where relevant. 

a) By how much do you expect the price of a 12-ounce can of soda to increase for consumers? [6 marks] b) Discuss the impact that the tax will have on the sellers of soda.