Tag Archives: Mayor Jim Kenney

Distributors say layoffs coming because of Philadelphia soda tax

government solve all problems

I’m sure no one saw this coming…/obvious sarc

From Philly.com: Two months into the city’s sweetened-beverage tax, supermarkets and distributors are reporting a 30 percent to 50 percent drop in beverage sales and are planning for layoffs. One of the city’s largest distributors says it will cut 20 percent of its workforce in March, and an owner of six ShopRite stores in Philadelphia says he expects to shed 300 workers this spring.

“People are seeing sales decline larger than anything they’ve seen up to this point in the city,” said Alex Baloga, vice president of external relations at the Pennsylvania Food Merchants Association.

In response, the city questioned the legitimacy of the early figures and predicted that customers responding to the initial sticker shock by shopping outside the city would return. “We have no way of knowing if their sales figures and predicted job losses are anything more than fear-mongering to prevent this from happening in other cities,” said city spokesman Mike Dunn.

Mayor Kenney harshly rebuked reports of coming layoffs late Tuesday night.

“I didn’t think it was possible for the soda industry to be any greedier,” Kenney said in an emailed statement. “ … They are so committed to stopping this tax from spreading to other cities, that they are not only passing the tax they should be paying onto their customer, they are actually willing to threaten working men and women’s jobs rather than marginally reduce their seven figure bonuses.”

The 1.5-cent-per-ounce tax on sweetened and diet beverages is funding nearly 2,000 pre-K seats this year as well as several community schools. The city hopes it will bring in $92 million per year for the education programs and to in part fund renovated parks and recreation centers.

To hit its annual target, the city needs to collect $7.6 million a month in tax revenue. The first collection was due Feb. 21 but collection information won’t be available until next month.  Early projections from the city’s quarterly manager’s report predict only $2.3 million will come through in the first collection. Dunn says that figure is expected to rise and the city still anticipates hitting its goal for the year.

The city predicted a 27 percent sales decline industry-wide as a result of the tax but early returns from some beverage sellers show higher losses, fueling a resurgence of the anti-soda tax coalition that fought vigorously against the tax last summer.

Bob Brockway, chief operating officer of Canada Dry Delaware Valley, which distributes about 20 percent of the city’s soft drinks, said sales were down 45 percent in Philadelphia. The company will lay off 20 percent of its workforce the first week in March. The distributor is a subsidiary of Honickman Affiliates, owned by Harold Honickman, who helped lead the opposition to the tax last summer.

The 35 jobs on the line include managers, sales people, and drivers, Brockway said. Sales are up about 20 percent in the suburbs, but that hasn’t helped the business break even, he said. On the whole, the company’s sales are down about 30 percent, Brockway said. “We don’t anticipate people coming back,” he said.

The tax, passed in June, went into effect Jan. 1 and is levied on distributors, who have passed it on to retailers.

Jeff Brown, CEO of Brown’s Super Stores, which manages six ShopRite stores in the city, said beverage sales were down 50 percent from Jan. 1 to Feb. 17 compared with the same period in 2016. More concerning, he said, is a 15 percent dip in overall sales at city stores. “People didn’t change what they drink,” Brown said. “They changed where they’re buying it.”

Read the rest of the story here.

DCG

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Philadelphia in shock over 51% beverage tax

Imagine paying $8.03 for this 8-pack of Lipton Diet Green Tea that normally costs $4.99.

philadelphia-beverage-taxb

That’s what Philadelphians woke up to on January 1, when a soda tax approved last June by the Philadelphia City Council and Democrat mayor Jim Kenney went into effect.

With 14 Democrats and 3 Republicans, the City Council’s vote was — SURPRISE! — 14-3.

The proceeds from the soda tax ostensibly will go to expand “early childhood education”. It is expected to raise about $91 million annually to be spent on expanding prekindergarten programs in the city; creating community schools; improving parks, recreation centers, and libraries; and offering a tax credit for businesses that sell healthy beverages.

Philadelphia’s 1.5-cent-per-ounce soda tax, the first such tax imposed in a major U.S. city, affects thousands of products – essentially anything bottled, canned, or from a fountain with either sugar or artificial sweetener added, with a few exceptions. That means a 12-oz bottle of regular or diet soda will have 18 cents added to its retail price, in addition to what Philadelphia (2%) and the state of Pennsylvania (6%) charge as sales tax.

That doesn’t sound too bad until you look at the receipt below, for a 10-pack of Propel Zero Berry Water Beverage Powder Mix (source: The Burning Platform).

philadelphia-beverage-taxa

The 10-pack was on sale for $5.99, $1 less than its regular price.

The beverage tax was $3.04, which is 51% of what the 10-pack costs (51% of $5.99 = $3.04).

Then add $0.72 sales tax, and the total cost of that 10-pack of flavored water comes to a whopping $9.75.

But if you had bought the same 10-pack a day ago, on December 31, you would have paid only $6.47 ($5.99 + 8% sales tax of $0.48). Today, however, the 10-pack costs you $3.28 more because of the beverage tax.

Chuck Andrews picked up a $1.77 gallon jug of tea, got home and looked at his receipt. He said: “When I read the receipt I’m like, ‘Wait a minute. I paid more in tax than I did for the product!’”. The tax on the $1.77 gallon of tea was $1.92 cents.

Philadelphia’s small businesses are getting an earful from customers about the higher prices and wonder what this will mean for their future. “The businesses take a hit with profits, the customers take a hit with payment, and it’s kind of a lose-lose in Philadelphia with this tax,” Mike Maziarz of Franzones said.

Many people are saying they will go out of Philadelphia rather than pay the hefty soda tax. Others, like Carl Saulsbury, say they will change what they buy: “So now I know. I’m buying water, water, water.”

~Eowyn