Philadelphia Soda Tax Reality Check

2017062101025444_DMR_AP3I7328We have not lived in Philadelphia for over twenty years now, but I still work within the city limits. My youngest son finds living in the city more energetic and interesting than our sleepy ‘burb. That’s fine for him, but the methods The City has chosen to fund operations and programs (i.e. taxing people and property more than ever) have made our decision to leave seem all the wiser.

Horror stories abound on how The City has executed its real estate reassessment initiative. Tales of how the Philadelphia Beverage Tax (PBT) has affected the people are far less dramatic, but perhaps more insidious for those who live and work there.

I haven’t really paid much attention to the dynamics and effects of the PBT, aside from noticing a 33% increase at the office vending machine and changing my drink-buying habits accordingly. Instead of laying out $2 for an 18.5 ounce bottle (formerly $1.50) of Turkey Hill’s magic ice tea elixir, I began to lug 64 ounce bottles into work, purchased near home at a savings of over $4 per bottle based on volume.

I guess you tend not to think about such things until you are gobsmacked through real-life experience. So after that adjustment was made, I never gave the issue another thought. Not my problem anymore …

06-16-16 Soda tax

Then a few weeks ago, I forgot a critical ingredient to my latest healthy lunch fad (Greek yogurt*, honey, fresh berries, granola* … * low sugar options) at my Philadelphia work location. Granola – the critical missing ingredient – brings it all together.

So I trudge over to the local ShopRite to granola-up and – being low on precious Turkey Hill DIT – I decide to check on availability and price. After over a year of not buying ridiculously taxed, unsweetened drinks, the horror must have faded from memory.

For home use, I buy the full gallon (128 oz.) version of Turkey Hills best. Simple math and you can see where this is headed.

At home (Acme Markets) I pay $2.99 a gallon. (Sale price this week $1.99!) As I wander the ShopRite aisles, I eventually find the object of one of my obsessions … at $5.12 a gallon!!!

Pretty sure I now have PTSD (Philadelphia Tax Stress Disorder) …

DISCUSSION POINTS:

(I don’t pretend to have all the answers … just questions, reactions, and observation … and maybe one solution)

1. How does such a phenomena NOT affect the food shopping habits of Philadelphia families, the profitability of City food markets, and the tax revenue projections?

I know my shopping habits would be affected if still living in Philly. People are not likely to shop twice for groceries just to avoid an intrusive tax. More likely is the obvious solution of moving all grocery shopping outside the City limits.

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2. Does the tax impact the economically disadvantaged in Philadelphia disproportionately?

It’s easy for most to hop in the car and head over the City Limits to shop in suburban soda tax havens. But what about the poor? Do they shoulder the disproportionate bulk of the tax burden, when bad habits are hard to break and the corner bodega is the only short-term food source?

3. It’s difficult to deny the health benefits of laying off sugary foods and drinks. This is how Government justifies taxing cigarettes. So what happens to the economic goals of the tax if the citizenry wised up and changes their drinking habits?

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Philadelphia levies a 1.5 cent/gallon vs. the above

Frankly, this will end up being a win-win for the City of Philadelphia, regardless of where actual soda-tax revenue falls.  If the citizenry fails to make healthier choices, the city cleans up.  If they are successful in changing their habits and sugary drink sales – and the taxes – dry up, the city will claim Healthy Choices Victory!

4. If the selling point is #3 above, why are drink distributors (who actually pay the tax to The City) allowed to price the tax across its entire product line … whether the drink contains sugar or not?

This really rubs the wrong way! Sugar tax? Fine … So why are Philadelphians and visitors paying the tax on drinks without sugar?!?

One might understand if the tax 1.5-cent tax was applied proportionately over sugar and non-sugar drinks. But my calculations indicate that the full tax is being paid on non-sugary drinks as well, which should at the very least be considered a fraudulent act on the consumers!

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Do you see a common thread?

5. A “Big Aha” was revealed last week, when John Dougherty – leader of the Philadelphia chapter (Local 98) of the International Brotherhood of Electrical Workers – was revealed to have supported the sugary drink tax as a way of punishing the local Teamsters affiliate for running a political ad during the 2015 Philadelphia election that portrayed Dougherty in a negative light.

The really funny twist to this curiosity is that apparently Johnny Doc targeted the wrong union!

Now I doubt Dougherty carried the day for the tax-happy leaders of Philadelphia; but it is an odd twist to see labor unions trying to stick it to each other using a general tax issue!

6. This discussion will become much more interesting if reliable grocery sales data were shared alongside the figures for actual beverage-tax collections. Both The City and grocery industry affiliations have been lobbing claims back and forth about the health of the city’s grocery industry as affected by the tax.

Frankly, I would be shocked if the figures did not show a significant decline in grocery sales in the city (as adjusted for the ridiculously high beverage tax). I would be even more surprised if The City ever admitted as much!

7. Finally, as recent as last year the City of Philadelphia and the Commonwealth of Pennsylvania were willing to package $5.7 billion in tax breaks and incentives to mega-billion-dollar Amazon in a failed attempt to get the corporation to locate its eastern headquarters there. This in addition to huge financial packages to keep other corporate entities, such as Comcast and some Philadelphia sports teams in the city, and other smaller real estate abatement used to attract development.

Putting aside smaller development deals, and recognizing the civic commitments by those “such as” corporations named above, would it be too much to ask potential mega-tax-break corporations to pick up the tab for an initiative like full-day kindergarten as a legitimate giveback to taxpayer-funded corporate largesse?

In reality such a giveback would benefit employees of those city-based corporate entities by ensuring more attractive public education alternatives. This would be – in effect – an indirect employer-provided benefit, especially for those younger corporate employees with young children or expecting them in their future.

To me, it sounds a lot better than punishing those without the wherewithal or strength to break an unhealthy and expensively taxed bad habit.

5 thoughts on “Philadelphia Soda Tax Reality Check

    • No kidding eh? He talks about it way too much. But if he ever gets out here to the upper Midwest he’s going to discover Kwiktrip and all it’s magical vices. Think Wawa but with better stuff. Turkey Hill on steroids.

      I too drink a lot of tea. I boil a pot of water, turn it off, add one teabag and ….that’s it.

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  1. I’m not concerned with this situation. I don’t drink soda and I don’t live in Philly. As far as I’m concerned the voters of Philadelphia got exactly the government they voted for. I’ll go out an a limb here as figure the average voter in Philly can’t name their ward leader. And thus they become subjects rather than citizens.

    But not to worry, governments run amok are going to collapse onto themselves. It’s going to get ugly the re-set button getting pushed. No government can sustain itself in a manner such as this sort of “tax”. People will revolt….hopefully at the ballot box.

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    • I find it puzzling how Liberals claim to and perhaps expect their poorer constituents to improve their lives under progressive “leadership” when they tax the crap out of them while – at the same time – kowtowing to corporate development. You cannot do BOTH and expect the citizen to prosper!

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      • The notion of slavery often associated social programs seems to be true. Those hit hardest by this tax won’t change habits, will pay the high price and thus continue to depend on a government which provides essentials, the hole is being dug deeper. The chains stronger.

        I kid you not when I speak of a revolt. We simply cannot sustain the current direction without losing control. We have taken this to the point we literally assault one another over a hat. AOC wants a tax of 70% and just this idea has some people sharpening their talons. I sure would like to see her turn over 70% of her congressional salary to the Treasury.

        Both sides are guilty. It’s no longer about running a nation but instead, exerting control.

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