A Soda Tax and Consequences
A Soda Tax and Consequences
A sweetened beverage tax sign is posted by sweetened beverages at a supermarket in the Port Richmond neighborhood of Philadelphia, July 18, 2018.
Photo:
Matt Slocum/Associated Press
When Philadelphia became the first major U.S. city to pass a soda tax in 2016, Mayor Jim Kenney said it would improve public health while funding universal pre-K. Two years in, the policy hasn’t delivered on that elite ideological goal. But the tax has come at the expense of working people and other vulnerable Philadelphians.
Proponents say the soda levy is technically a tax on distribution, but it functions like a regressive consumption tax as retailers pass the cost onto consumers. Between the Jan. 1, 2017, start date and Sept. 30, 2018, the city raised more than $137 million, and poor Philadelphians disproportionately bore the burden of the 1.5-cent-per-ounce levy.
So far, the money isn’t going where Mr. Kenney said it would. More than $101 million went into the city’s general fund, while less than one-fourth has gone to pre-K. The mayor's office claims it was waiting to spend the revenue until state courts upheld the soda tax, and it says the quarterly statistics don’t reflect spending that will occur over the next fiscal year. Within five years, Mr. Kenney’s spokesman says, the city will devote “more than 100% of the revenues” from the soda tax to universal pre-K and other promised beneficiaries.
You don’t have to wait to observe the soda tax’s other economic consequences. On Jan. 2, Brown’s Super Stores announced the closure of a ShopRite on Haverford Avenue. The supermarket is close to the city limit, and customers discovered they could avoid the soda tax by shopping outside Philly.
Sales at the Haverford ShopRite are down 23% since the tax took effect, CEO Jeff Brown says, and the once-profitable store began losing about $1 million a year. Mr. Brown owns 12 other supermarkets, including six in Philadelphia besides the Haverford store. Overall sales at the locations within Philadelphia are down by more than 15% since the soda tax took effect. Mr. Brown has shrunk his workforce by 200 by not filling jobs when they go empty, and the Haverford ShopRite closure will eliminate 111 more jobs through attrition.
That means fewer opportunities for workers with a criminal record. Mr. Brown’s supermarkets employ more than 600 of them, with the majority in Philadelphia. Some of the ex-cons have become his most-valued employees. “It depends on what their background is,” Mr. Brown says, “but a lot of times people were in business—it just wasn’t a legal business. But you still learn the fundamentals of business. They end up being able to do high-paying jobs relatively quickly.”
If ShopRite hadn’t taken a chance on him, “I’d probably be dead, to be honest,” says Anthony Jackson, who was in and out of prison from his teens until his late 30s. When he tried to find lawful work, no one would hire him—until he applied at one of Mr. Brown’s stores.
“I replaced my crack cocaine with broccoli and macaroni and cheese, which are the top sellers,” Mr. Jackson says. Over nine years he’s worked his way up to frozen-food manager. “The Brown family saved me. They showed me something different, that I could be a man in society,” he says.
That gets no sympathy from the mayor. “Jeff Brown is a cry baby, basically,” Mr. Kenney told KYW Newsradio 1060 this week. He added that “if you can’t run a supermarket without soda sales, then something is wrong with your business practices.” Spoken like a true modern progressive.
Appeared in the January 5, 2019, print edition.
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