A newly imposed tax on sugary drinks sold within Philadelphia likely earned a fraction of the revenue its advocates had expected, city officials said Tuesday.
Philly had hoped that the 1.5 cent-per-ounce tax on sodas and other sweetened drinks would reap about $7.6 million each month for City Hall upon taking effect Jan. 1. According to preliminary data, however, the levy earned the city a measly $2.3 million during its first month on the books, or only 30 percent of what was expected, local media reported Tuesday.
Grocery stores and wholesalers alike now say they’re weighing potential layoffs to make up for lost profits attributed on the excise.
“People didn’t change what they drink,” the CEO of Brown’s Super Stores told the Philadelphia Inquirer. “They changed where they’re buying it.”
Jeff Brown, the owner of six ShopRite grocery stores within city limits, said beverage sales slipped 50 percent from Jan. 1 to Feb. 17 over the previous year’s figures, and cited a 15 percent overall dip in sales at city stores. As a result, according to Mr. Brown, he’s already eliminated about 280 jobs and is eyeing additional layoffs in the coming months.
“In 30 years of business, there’s never been a circumstance in which we’ve ever had a sales decline of any significant amount,” Mr. Brown told Bloomberg recently. “I would describe the impact as nothing less than devastating.”
Another company closely tied to the local food industry, beverage distributor Canada Dry Delaware Valley, reportedly expects to lay off 20 percent of its workforce in March on account of similarly suffering from devastating sales last month. The company distributes about 20 percent of the city’s soft drinks, and witnessed a 45 percent loss in sales during the month of January, its owner told the Inquirer.
“People are seeing sales decline larger than anything they’ve seen up to this point in the city,” Alex Baloga, the vice president of external relations for the Pennsylvania Food Merchants Association, told the Inquirer.
City Hall responded with skepticism to reports of the soda tax’s toll, however, and accused critics of fearmongering in hopes of ensuring other cities don’t adopt similar rules.
“I didn’t think it was possible for the soda industry to be any greedier,” Mayor Jim Kenney told the Inquirer. “They are so committed to stopping this tax from spreading to other cities that they are not only passing the tax they should be paying onto their customer, they are actually willing to threaten working men and women’s jobs rather than marginally reduce their seven-figure bonuses.”
Despite preliminary data suggesting a lackluster start to the city’s soda tax, however, the mayor’s office on Thursday announced that a full accounting of January’s data suggests the excise actually raised about $5.7 million in January — more than double that of earlier estimates, but still less than what the city had hoped for.
“The preliminary total of $5.7 in revenues for the first month of the Beverage Tax is very good news,” Marc Stier, the director of the Pennsylvania Budget and Policy Center, told NBC Philadelphia.
Philadelphia had hoped its infant soda tax would earn upwards of $91 million in annual revenue to be allocated toward various educational and recreational programs throughout the city. The tax amounts to an additional $1.44 being applied to each six-pack of 16-ounce soda bottles, The Associated Press reported.
• Andrew Blake can be reached at ablake@washingtontimes.com.
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