Northwest Arkansas Democrat-Gazette
City’s sweet-drink tax sours sales
Dealers, grocers spar with Philadelphia as job cuts loom
CANDICE CHOI AND KRISTEN DE GROOT
PHILADELPHIA — Less than three months into Philadelphia’s new tax on sweetened drinks, the stakes have escalated: Beverage-makers say the measure is hurting sales so much that they need to cut jobs, while city officials say the moves are a ploy to get the tax struck down.
Some supermarkets opposed to the tax are making a statement by printing out the added cost on receipts and store shelves. The tax began Jan. 1 and is levied on transactions between drink distributors and retailers, but many grocers are passing it on amid an “Ax the Bev Tax” campaign to kill the measure in court or through repeal. One widely shared photo on social media shows a receipt for a 12-pack of 16.9-ounce bottles of Propel Water, which is artificially sweetened. The receipt says the drinks cost $5.99, and the tax adds $3.04.
IGA supermarket has hung signs near affected drinks that say “Philadelphia Sugar Tax Item,” with the price of a 2-liter of Coke going from $1.99 to $3.
“I just can’t afford it,” said Margaret Atkinson, who was shopping at the supermarket this week. Atkinson said she has switched to generic brands and is asking a nephew in the suburbs to pick up soda for her. She’s also drinking more homemade iced tea and bottled water with flavor packets.
Fran Flanagan, also shopping at IGA, said he planned to buy more of his drinks out-
side the city on weekends, and noted that the tax has changed his drinking habits.
“Mostly I’m drinking spigot water, and not because it’s healthier,” said Flanagan, who opposes the beverage tax.
Philadelphia is among the first U.S. cities to implement a per-ounce tax. While officials touted it as a way to raise money for pre-kindergarten education — not as a health measure as in other cities — some advocates also hail it as a way to fight sugary drink consumption and obesity. For the beverage industry, which has already seen soda consumption decline for several years, overturning the tax in Philadelphia could be critical in sending a message to other cities and stopping the measures from gaining momentum.
Soda-makers have previously
opposed such taxes by warning that supermarkets could pass the cost on to other groceries, not just drinks. They also say there’s no evidence that the taxes work in changing behavior or reducing obesity, since people can still fill up on other calories.
In Philadelphia, PepsiCo says sales are down 40 percent compared with a year ago since the 1.5-cent per ounce tax took effect, and it will need to cut 80 to 100 workers. A Canada Dry bottler says sales are down 45 percent and it had to lay off about 30 employees. ShopRite owner Wakefern also says overall sales at Philadelphia stores are down as much as 25 percent as people go outside the city to get groceries, and that it had to cut hours for workers.
Mayor Jim Kenney’s office notes that the law does not require distributors and retailers to pass on the cost of the tax, and says people should be skeptical about
the need for layoffs since the business coalition is trying to overturn the tax.
“They are literally holding hostage the jobs of hardworking people in their battle to overturn the tax,” spokesman Lauren Hitt said.
The city also said the prekindergarten program the tax supports has created about 250 jobs.
Temple University got caught in the fray this week when it said it was raising its meal plan fee largely because of the beverage tax, then backtracked after being accused by the mayor’s office of using the tax as a scapegoat for higher fees.
The school said it would check its numbers and ask its vendor to lower any extra charges.