The controversial tax on sweetened drinks that poured an incredible $5.7 million into Philadelphia’s coffers in its first month is obliterating the grocery sales and beverage industry, according to some business experts.
The tax of 1.5 cents on every ounce of sugary drinks and related syrups is expensive: It adds about $1 to the cost of a 2L soda. A 12-pack of 12 ounce soft drinks goes up to $2.16. The duty won endorsement a year ago in spite of intense resistance from various dealers and wholesalers who now accuse the taxation scheme of layoffs and pay cuts.
The City Revenue Commissioner Frank Breslin on Thursday issued a notice of January’s evaluated tax haul, over double the expectations. The number could further increase since not all dealers and distributors have enlisted and paid tax for the month, he included.
The estimated value for the full monetary year is more than $91 million, yet the first couple of months were anticipated to be lower than normal since the inventory on hand by 1st Jan is not subjected to any tax.
The Director of nonpartisan Pennsylvania Budget and Policy Center, Marc Stier said, “That the first month’s beverage tax revenues are so high is a reason to believe the goal for the year will be met.”
The revenue from the assessment will help support parks, libraries, pre-K program, and other ventures. However, Alex Baloga, VP of external relations at the Pennsylvania Food Merchants Association, said the tax is doing more damage than good.
Baloga said retailers quickly encountered an “enormous” impact. The beverage sales are down as many people of the city cross into rural regions to purchase their soda, he said. That has prompted to change the shopping perspective — a few clients wind up doing all their shopping outside the city, he said. Merchants and stores in Philadelphia have already started cutbacks, he included.
The Secretary-Treasurer of Teamsters Local 830 Danny Grace said that more than 1,700 of his members are salesmen, account representatives, and drivers for the soda industry. The company reported a drop in their sale by a huge margin.
Jeff Brown, the Chief Executive Officer of Brown’s Super Stores, which deals with a few ShopRite stores in the city, revealed to Philly.com this week that the sales are down half and the overall deals are down 15%. He said he hopes to shed 300 occupations in the coming months. He told the news site – “People didn’t change what they drink; they changed where they’re buying it.”