- The Philadelphia Beverage Tax generated $6.5 million in revenue in April, a decrease from the $7 million earned in March, according to a report from the Philadelphia Business Journal.
- While a spokesman for city called the April figure "preliminary" and attributed it to "growing pains," a spokesman for Ax the Philly Bev Tax told the Business Journal that the lower-than-expected revenue figures "highlight the flaws in this failed tax, which is costing jobs, raising prices for working families and hurting local businesses without providing the stable source of revenue the mayor claims the city needs."
- City officials originally estimated the tax would bring in $46 million for fiscal 2017, which ends June 30. Based on these figures, the tax so far has only brought in $26 million with two months left.
Soda taxes have so far proved controversial in the cities that have taken them up — and Philadelphia, the first major U.S. city to implement such a tax, is no exception. The city's 1.5-cent-per-ounce tax on sugary beverages has been a point of contention for many ever since it was enacted in June 2016. The lower-than-expected revenue figures suggest that consumers may in fact be purchasing less sugary beverages than before — or are driving outside the city limits to obtain them.
The practice of instituting soda taxes has been spreading. In the last year, U.S. municipalities such as San Francisco, Oakland and Cook County, Illinois, which includes Chicago, have approved similar laws to tax sugary beverages. But soda manufacturers contend these taxes are having a negative impact on the industry.
The taxes have troubled soda manufacturers, who say they have a negative impact on business. “It’s a devastating tax and there is no rationale for what they did," James Trebilcock, executive vice president and chief commercial officer for Dr Pepper Snapple, told Food Dive recently. "We’re fighting as an industry to educate people about the punitive nature and the fact that it’s very regressive. This is a money grab around municipalities that are going bankrupt.”
In Philadelphia, sales in some grocery stores decreased by as much as 50%, prompting soda manufacturers to layoff employees. Soda giant PepsiCo said in March it would need to lay off 80 to 100 workers after sales dropped 40% as a result of the tax. Canada Dry Delaware Valley, which distributes about 20% of Philadelphia's soft drinks, announced in March it would lay off about 20% of its employees. Coca-Cola recently told Food Dive that its wholesalers in Philadelphia estimated that soda volume delivered by its bottlers has fallen by one-third since the tax was instituted.
While The American Beverage Association has spent millions of dollars to fight this tax and others like it, efforts so far have largely proven futile. Opponents of the tax currently await a crucial ruling from the Pennsylvania Commonwealth Court, which could yet strike down the tax.
But regardless of the tax and others like it, the soda industry has bigger problems to contend with: Soda sales have declined for 12 consecutive years as consumers move away from soda and other sugary beverages, turning instead toward teas, waters and fruit-flavored, antioxidant-infused beverages.