Did the city really make $5.7 million in Beverage Tax?

Alex Lloyd Gross photo Delaware Valley News.com An empty soda section in a supermarket.

By Alex Lloyd Gross

Yesterday,  February 23, 2017  the City of Philadelphia announced that they took in $5.7  million in the month of January . That was the inception of this tax.  Proponents of this tax claim the money will fund Pre-K . The city hopes to make up to 91 Million dollars in 2017 and they claim to be well on their way. “The soda manufacturers are billionaires and we are asking a small amount to fund our schools “, said Mayor James Kenney.  Kenny is  facing fierce opposition to this tax, from the press and from his constituents, some of whom are about to lose their jobs.  The city is spending over a million dollars in legal fees to fight challenges.

So, is the tax successful and did the city really bring in that kind of money?  The answers look to be no, and yes, in that order.  The tax is imposed on distributors. not on end users (consumers).  The beverage distributors purchased the soda in January to be in compliance and , yes, they paid $5.7 million in taxes. However, the soda  and taxable beverages are sitting in a warehouse, unsold and actually, stores and  restaurants are selling 50 percent less  product. That means  lay offs, and no pay increases for people.  Numerous media reports like this one and others tell a different story than the one the city is trying to put out.

The numbers are premature, since they do not reflect end user sales.  To declare the tax successful,  we should wait to seethe tax revenue brought in during the first  six months , to see if  they stay the same or fall off. Currently, the  litigation is scheduled for April.