Soda Taxes Don't Work


PREMO Member
Philly Admits Soda Tax Is Crushing Local Small Businesses, Expanding "Food Deserts"

Just one week after Chicago shockingly repealed their soda ban following a revolt from local business owners (see: Soda Tax Fizzles In Chicago As Cook County Officials Cast Decisive 15-1 Repeal Vote), it seems that Philadelphia's flirtations with forming a more perfect "nanny state" via the elimination of sugary drinks could be on a collision course with a similar fate.

As WHYY points out today, a survey conducted by Philadelphia's Controller Alan Butkovitz — a longtime opponent of the soda tax — found that nine out of 10 businesses reported revenue loss since the city’s sweetened beverage tax took effect earlier this year. Of those reporting revenue loss, 60% of them blamed the soda tax for their woes.

City Controller Alan Butkovitz today released the results of the Philadelphia Beverage Tax survey that found more than 60 percent of businesses indicated a revenue loss as a direct result of the new tax.
Of the 650 businesses that reported a decline in year-to-year revenue, more than 400 attributed “most” or “all” of the decline to the implementation of the Beverage Tax. The majority of these businesses reported revenue losses of more than 10 percent.
“The overwhelming majority of businesses that carry products subject to the Philadelphia Beverage Tax feel a significant impact as a result of the tax,” said Controller Butkovitz. “The tax has had detrimental effects.”
Butkovitz’s team, with help from various business groups, reached out to “more than 1,600” businesses that sell or sold taxed beverages. Response was purely voluntary, and 741 businesses filled out questionnaires.
“This is not going to be the comprehensive answer to everything, but I think it does create a serious warning and an attestation of what has been stated by a number of the businesses,” he said during a Monday news conference. “Because I think the administration has minimized and ridiculed the idea that businesses are fighting for survival.”
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PREMO Member
As outlined by Hotair on Saturday, the “soda tax” has actually led to Philadelphia residents traveling outside the city to buy their soda (and likely other goods), decreased the city’s revenue, and led to layoffs in the local beverage industry and cut hours for employees at small markets. It did not, however, lead to an increase in healthier beverage purchases in the city.

When the soda tax was first announced, workers at Pepsi took a hit. “With sales slumping because of the new Philadelphia sweetened beverage tax, Pepsi said Wednesday that it will lay off 80 to 100 workers at three distribution plants that serve the city,” reported in March of 2017.

And last month, the local outlet reported that the owner of Acme Markets, who has 16 stores in Philadelphia, had to cut employees’ hours because of the tax: “The beverage tax fell on about 4,000 items. In Acme city stores, soda sales dropped as much as 80 percent. Sales of other items covered by the tax, such as juices, creamers and energy drinks, were down 30 percent, and the number of customers declined by 5 percent. Philly stores cut an average of 150 to 200 employee hours per week, resulting in lighter paychecks for employees."


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PREMO Member
The soda tax in Philly works, just not to the benefit of everyone. According to their website, they have taken in nearly $150M in two-and-a-half years. Of course it's not anywhere near what they predicted they would take in (revenue was about 15% lower than expected in the first year).

  • The total revenue generated from the Philadelphia Beverage Tax since its inception is $149.2 million. This includes revenue from fiscal years 2017 and 2018 and the first two quarters of fiscal year 2019.
  • Expenditures related to Beverage Tax funds include spending on Pre-K, Community Schools, and Rebuild as part of Parks and Recreation Special Projects. Beverage Tax revenue not spent in these three areas remains in the General Fund, the City’s main operating fund.
  • The majority of Beverage Tax revenue, $106.4 million or about 71.3% of the total, remains in the General Fund.
  • The total spending for each of the three areas is
    • $38.2 million, or 25.6% of the total revenue, on Pre-K;
    • $3.9 million, or 2.6% of the total revenue, on Community Schools; and
    • $725 thousand, or 0.5% of the total revenue, on Parks and Recreation, Rebuild.