Ax the Bev Tax

The Philadelphia Beverage Tax:
Fiction vs. Fact



Fiction:
The beverage tax was meant to help working families and lower-income communities.

Fact: 
The tax is regressive, placing a larger share of the tax burden on those who can least afford it. It is a difficult tax to avoid as it covers more than 4,000 beverages, including low-calorie and no-calorie options, sports drinks, teas and many juices. Working families are increasingly struggling to make ends meet—they understandably have said that they cannot afford to continue to pay more than their fair share. The Progressive Democrats of America agree that beverage taxes are regressive and “end up targeting the very people that can least afford it – working families and people of color.” This tax also makes it harder for corner stores and bodegas – which provide jobs to workers and are critical to local economic development – to stay afloat.

This tax was not enacted to benefit the community as stated. It stemmed from a petty political dispute intended to “cost the Teamsters 100 jobs in Philly,” even as the mayor was pledging that it wouldn’t negatively impact jobs. Philadelphia residents never got the honest debate they deserved. And any public policy specifically designed to cost jobs should be repealed immediately.



Fiction:
The beverage tax isn’t hurting local businesses.

Fact:
The beverage tax is devastating Philadelphia retailers because it is causing families to go outside the city and do their grocery shopping elsewhere, decreasing sales to local stores.

One of the most visible examples is the closing of a ShopRite that served West Philly for 30 years. The community lost one of its few sources of fresh food and grocery staples, a mainstay of the neighborhood that employed more than 100 union grocery store workers.

ShopRite owner Jeff Brown told The Philadelphia Inquirer that the store’s sales plummeted from $30.5 million annually to $23.4 million annually after the tax was put into place – a stunning sales drop of more than $7 million a year.

Further, the beverage tax has forced the major Philly grocery chain, ACME, to cut employment by 2,400 hours of work per week, according to The Philadelphia Inquirer. In a presentation to the Mayor's Office, ACME's president cited a 5% decline in customers, an 80% drop in soda sales and a 30% drop in other items covered by the tax, such as juices and creamers.

In addition, a study conducted by the international consulting firm Oxford Economics, in partnership with the American Beverage Association and using independent market research data, found that the tax has cost more than 1,200 local jobs – mostly because shoppers have turned to suburban stores outside city lines to avoid the tax. An independent study conducted by Stanford, Northwestern and the University of Minnesota has confirmed that shoppers are fleeing the city to avoid the tax and even went as far to conclude they “don’t find evidence that cross-shopping decreases over time, so it is therefore unlikely to be a short-term effect.



Fiction:
The City doesn’t have enough money on hand and needs the beverage tax to fund pre-K, community schools and the Rebuild initiative.

Fact:
The city has a surplus of more than $360 million. Mayor Kenney can fund important programs, like pre-K, Rebuild and others, without imposing harmful taxes that place a larger share of the tax burden on those who can least afford it. Additionally, the Mayor during his 2015 campaign promised no new taxes to fund pre-K. However, one of his first actions in office was to pass the beverage tax while his budget spending has increased by $600 million since he took office four years ago. Meanwhile audits of the city’s books have shown woeful mismanagement of taxpayer dollars – including nearly 1 billion dollars in accounting mistakes.

The City should be focused on making government work better for working families by managing its finances rather than implementing new taxes.



Fiction:
The administration needs every dollar of beverage tax revenue to fund the three identified programs.

Fact:
More than two years after the tax was implemented, over 70% of the beverage tax revenue is sitting in the city’s bank account unspent, according to a report from City Controller Rebecca Rhynhart.



Fiction:
Beverage tax revenue is to fund only the three identified programs.

Fact:
Most beverage tax revenues are still sitting in the city’s bank account.

There are no legal requirements that the city spend beverage tax money on pre-K, community schools and Rebuild; there is no ordinance or regulation that requires this. The mayor can redirect these funds any way he wishes. Right now he is saying the tax funds should go to pre-K, Rebuild and community schools but there is no accountability that requires the money must go to these programs.

Taxpayers of Philadelphia deserve real transparency when it comes to how their money is spent - not empty promises and secret budget tricks.



Fiction:
The beverage tax only impacts soda. Residents can easily avoid the tax by buying different beverages.

Fact:
The 1.5 cents per ounce levy impacts more than 4,000 beverages – including ice teas, sports drinks and no- and low-calorie options. It is even imposed on some almond milk and reduced-sugar juices.

This makes the tax incredibly difficult to avoid and pushes families to go outside the city and do their shopping in the suburbs.



Fiction:
The beverage tax is a major public health victory.

Fact:
The only independent study to examine beverage tax impacts, done by researchers at Stanford University, Northwestern and the University of Minnesota, found no significant reductions in sugar or caloric intake as a result of the tax. Instead, researchers found that suburban beverage sales increased. The political organization, Progressive Democrats of America, has said of the beverage tax: “making people poorer is not good for public health.

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