Soda Taxes

Philadelphia Says Soda Tax Revenue Exceeded Projections in February, While Pepsi Stops Offering Two Liter Bottles, Six-Packs

The city wants to borrow $300 million based on how much it thinks it'll raise from the tax.

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wavingatyou/flickr

Philadelphia's Department of Revenue says it collected $6.4 million from the city's new soda tax in February, and says that's more than the $5.9 million it projected. Last year the city collected $5.9 million on a projection of $2.3 million. City officials said their projections were conservative because they weren't sure how long it would take for various businesses to comply with the tax, which is required to be paid at the distributor level.

While the city was still optimistic last month that it would meet its annual projection of $91 million, that would require monthly revenue of $7.87 million for the remainder of the year. Mayor Jim Kenney initially claimed the tax could bring in $400 million over five years when he proposed a three cent an ounce tax. The tax that passed was half as large, at one and half cents an ounce, although at $91 million for the first year the projections haven't been cut in half. The projections seem particularly unrealistic given long term trends in soda sales, which have been down for more than a decade, hitting a 30-year-low in 2016.

Soda companies, which are challenging the Philadelphia tax in court, also say sales are down in the city, which anyone living here should be able to confirm. Pepsi said this week it would stop distributing two-liter bottles and six packs to stores in Philadelphia because of the effect the tax has had on sales. "Because of the Philly Beverage Tax, people are buying far fewer taxed beverages," Pepsi wrote in a letter to store owners, as ABC 6 reported, "particularly those in larger package sizes because they now cost so much more." Pepsi previously laid off dozens of workers in Philadelphia-area plants due to the tax.

The city uses Pepsi's opposition to a tax that obviously harms it as a reason to dismiss any of the company's complaints. "Pepsi's reasoning for their layoffs and for no longer distributing certain beverage sizes is all self-reported by a company that is actively fighting to overturn the beverage tax in court," a city spokesperson said according to ABC 6. Pepsi says its sales are down 40 percent in the city and up 10 to 15 percent outside the city.

Kinney credited his ability to get a soda tax passed when his predecessor, as well as mayors in other cities, failed to do so, by framing it as an effort to raise revenue for specific proposals (public funding for things like universal pre-K and parks in particular) as opposed to an effort to incentivize healthier choices, as it had often been framed previously. That framing just adds another level of deception. While vice taxes are loathsome tools of social control, at least their nature as taxes whose revenue declines in the long term as consumers alter habits to avoid the tax, is incorporated into the proposal—it's the whole point. Not so here, where the city promises to fund all kinds of things with the new tax, without taking into account that revenues will by design decline, and in fact denying that reality all together. The city wants to get around the problem by borrowing $300 million before the revenue is in to fund the projects it insisted the soda tax would pay for, and blames the ongoing lawsuit, set to go to trial next month and to which state representatives from both major parties have signed on with amicus briefs, for slowing down that process of borrowing money based on rosy revenue projections.

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  1. Regressives sure love to tax the poor for having different tastes than they do. I’ll buy onto a soda tax as soon as their fucking Starbucks is taxed.

    Oh…. you mean the stuff that hipster progs like isn’t taxed? Oh what a coincidence?

  2. Time to open a soda store just outside Philadelphia.

    1. That’s all fine and good until the city convinces the state to pass the equivalent of an amazon tax. I’m sure they’ll be able to find or invent some nexus between your new business and the city of philadelphia. And if all else fails, there are always use taxes to screw with your customers. You just can’t fight city hall, son.

    2. There’s plenty of stores just outside the city limits to fill that need.

      Of course, if you made it a drive-thru soda warehouse, you might gain a certain advantage.

      1. Sales of soda are up 15-20% just outside of the city and sales within the city are down 50%. Even worse, overall sales figures (not just beverages) are reported as down 15% by one chain of 6 Shoprite stores. I would not be surprised if this results in a net loss for the city.

        1. The city won’t lose. Don’t forget the $300 million loan.

  3. Those philly politicians should be jailed and ass raped.
    Is that chip woody enough?

  4. While vice taxes are loathsome tools of social control, at least their nature as taxes whose revenue declines in the long term as consumers alter habits to avoid the tax, is incorporated into the proposal ? it’s the whole point completely fabricated by the government.

    FTFY. Nobody buys that anymore, do they?

    1. Nobody buys that anymore, do they?

      I wasn’t even aware of this nature of vice taxes to begin with. At least half the time the vice is hitched (despite the explicitly fungible nature of money) to a social good or necessity such that the waning is undesirable anyway (taxing smoking to cover healthcare costs, taxing alcohol to support battered women, licensing/taxing casinos to fund public education).

      1. by that logic I should tax leftist protests and use it to fund remedial economics classes

        1. The city is using the tax to support gun-violence research at Harborview Medical Center in Seattle. But the city isn’t spending the money until a 2015 lawsuit challenging the tax is resolved.

          I can only assume, because Seattle that a) the tax *will* outlive the court case and b) the case will exceed total revenues of the tax, however long it lives, by at least 2X.

          I refuse to believe the tax is not costing them money. But, you know, 3 out of 3 branches of government routinely support the right so lets continue to blow money to beat that horse until it breathes again.

  5. So they want to securitize the tax revenue stream by issuing bonds, eh?

    That reminds me of all those states who securitized the tobacco lawsuit settlement payments they get from the big tobacco companies.

  6. …sales are down in the city, which anyone living here should be able to confirm.

    If sales drop too far, they’re just going to have to increase the tax amount to meet revenue projections. Also, everyone in and around Filthadelphia is an a-hole who deserves this and the city should just be annexed by New Jerksey already.

  7. “Because of the Philly Beverage Tax, people are buying far fewer taxed beverages,” Pepsi wrote in a letter to store owners, as ABC 6 reported, “particularly those in larger package sizes because they now cost so much more.” Pepsi previously laid off dozens of workers in Philadelphia-area plants due to the tax.

    You know what I missed from Reason? An article about how HB2 prevented all the sports teams and banking/tech firms from turning a profit in NC. I mean, we shamed the tranny-hating hicktards from rural NC for using HB2 to force the NBA, NCAA, Paypal, and Deutschebank out of Charlotte but no word on how the uber-oppressive tranny tax has negatively impacted… plastic surgeons(?) from stitching boobs onto or removing boobs from people forcing consumers and customers to openly flee.

    It’s almost like cultural (or social or whatever) libertarians are only cultural when they don’t want to be libertarians and are only libertarian when they don’t like the culture.

    1. These people aren’t boycotting soda. They can’t afford it. The two issues are only tenuously related.

      1. These people aren’t boycotting soda. They can’t afford it. The two issues are only tenuously related.

        Socially liberal and fiscally conservative is, especially in this case, more brutally oppressive than plain old conservative in both cases. For those who get branded as bigoted, team red libertarians that generally believe/recognize socially liberal/fiscally conservative as a (potentially forgivable) sin, the parallels are pretty apparent.

        You say they’re unrelated, I suggest Reason could use a good bludgeoning with their own right hand for having no clue what their left hand is doing and acting like “Why is this even an issue?” when it’s pointed out. We get an article about how Christians, more than a hundred years ago, opened the door for their own gay wedding cake persecution but the link between parallel social engineering measures under the same progressive social agenda less than a few years apart is tenuous at best? Really?

  8. This week on it’s always sunny in philidephia the gang buy pepsi outside of philidephia and try to sell it door to door

  9. I think everything east of Denver should be shit-canned.

    1. And then we can shitcan Denver and points west

  10. Cities baffle me. You know that thing where if you put too many rodents into a cage they stop acting like rodents?

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