Philadelphia City Council in March took action that will hopefully lead to the repeal or modification of the city’s crippling sugar-sweetened beverage tax.
The Council approved a resolution on March 21 to study the economic impact of the 1.5-cent-per-ounce tax on sweetened beverages and hold hearings on the completed study.
The prime sponsor, Councilwom- an Maria Quinones-Sanchez, said the study will influence a bill she recently proposed to adjust the tax starting in fiscal year 2020. The bill is not specific as to whether it will simply reduce the tax or phase it out completely, however, it sends a message to Mayor Jim Kenney that “there has to be modifications” to the tax.
The Kenney administration wel- comed the study, saying that without the soda tax, the programs it funds will go away. Quinones-San- chez contends the city should find more stable revenues to support the programs funded by the tax.
According to a December report from the City Controller’s Office, Philadelphia raised $137 million from the tax between 2017 and the first fiscal quarter of 2019. Kenney’s proposed budget anticipates $76.6 million in revenue from the tax next year. The administration orig- inally projected the tax would raise $91 million annually and expected revenues to decrease over time.
Councilman Allan Domb said that the tax was driving people to pur- chase sweetened beverages outside the city and any study of the tax should investigate whether reduc- ing the rate could lead to more sales in Philadelphia.
You don’t have to look far to see the hardship created by the tax. Jeff Brown, president and CEO of PFMA member Brown’s Super Stores Inc., announced in January that he would close his Haverford Avenue ShopRite, blaming Phil- adelphia’s tax on soda and other sweetened beverages for a 23 per- cent decline in sales and an annual net loss of more than $1 million.
Quinones-Sanchez was not able to provide a cost estimate for the study and doesn’t anticipate it will be completed before the May 21 primary.
According to the coalition, AxThe- BevTax, the levy has “drastically raised prices on thousands of com- mon beverages — a 6-pack of diet green tea that typically costs $4.99 is now $6.07 with the tax. Price increases really add up for families living on a fixed income.”