There it was, on Page One of the Inquirer’s local section, the unsurprising headline: “Philly tops in cities that saw beverage sales drop with soda tax.”
Other soda-tax cities reported similar results.
Not surprising because anyone who has mastered Economics 101 knows that the more heavily an item is taxed, with rare exception, the less it sells.
What was surprising was this statement from NYU food studies professor Marion Nestle: “These taxes are having the effect that they were intended to have, and that this is a reasonable public health measure. It’s something that discourages consumption of full sugar beverages.”
“Intended to have?” Let’s unpack that.
First, it was not sold by Mayor Jim Kenney as a public health measure. A few years earlier, Mayor Michael Nutter tried that tack, and failed.
Kenney’s argument was economic — this was the easiest way to raise money to fund pre-K education, plus 200 Rebuild projects, such as recreation centers, parks, and libraries.
Second, despite what the professor said, the tax was not on “full sugar beverages.” It was also on diet soda and flavored water that contained no sugar at all.
The study, published by the JAMA Health Forum, analyzed five cities that instituted so-called soda taxes, and found that Philadelphia recorded the greatest drop in sales — 46.8%. We’re No. 1! But not in a good way.
Accordingly, receipts also dropped, which underscored the foolishness of tying funding of projects to an unstable revenue stream. In this case, consumers stopped buying the product, or bought it outside the city limits. As sales dropped, so did the revenue it generated.
In a semi-related development, the Inquirer earlier reported the Philadelphia School District would have a $407 million shortfall in fiscal 2025.
In case you have forgotten, to fund Philly’s schools, the city in recent years instituted a 10% tax on drinks served across the bar, and a $2 tax on a pack of cigarettes. They came on top of a 3.75% income tax on city residents, plus a 1.39% real estate tax split between the city and the schools, and a 1.21% business use and occupancy tax.
The funding of pre-K through the soda tax has been described as Kenney’s legacy.
As previously reported, that legacy stands in thread-bare Keds.
In 2017, officials expected to offer 6,500 pre-K seats by 2023. But only 5,250 seats were made available, due to lower-than-expected revenue. Less-than-expected by whom? Remember Economic 101? Higher taxes, fewer sales.
For the mathematically challenged, 5,250 is 80% of 6,500 — meaning a 20% shortfall of pre-K seats, which ain’t nothing.
Another embarrassing admission: The pre-K is far from “universal,” which is how Kenney promoted it.
There are about 40,000 3- and 4-year-olds in Philly. An estimated half attend no pre-K, or are in one that doesn’t meet state standards, the Inquirer said.
Now we are down to 50% of all kids, and 50% was a failing grade when I went to school. An F.
When he began his tenure, Kenney touted his signature Rebuild program as a once-in-a-generation chance to remake as many as 200 of the city’s recreation centers, parks, and libraries.
Only 17 have been completed. In eight years.
That’s an F-.
So put together the schools running in the deep red, and lagging revenue from the soda tax, what do you get?
More taxes!
What’s left? Cheesesteaks? TastyKakes? Soft pretzels? Water ice?
And Mayor Cherelle Parker wants to increase the school year?
Who is going to pay for it?
The soda tax was another blunder by Mayor Jim Kenney. It didn’t stop the consumption of soda by the citizens of Philadelphia. The tax made people shop outside of the city, not only for soda but also for their weekly food order. Kenney caused a problem for ever super market in the city. Wasn’t the Soda Bill a way for Johnny Doc to punish another union he had problems with? Well on January 1st Jim Kenney left office and in March Johnny Doc will be sentenced for two of his federal convictions and go on trial for his third case. Things are looking up for the people of Philadelphia, let’s have a toast what’s your poison Pepsi or coke.
Stu, a couple of years ago I rode my bike all the way down Market Street from Center City to Upper Darby. When I crossed Cobbs Creek into Delaware County, there was a line of small stores selling – drum roll – cigarettes and soda. The city’s taxes on cigarettes and soda have spawned an industry catering to city residents who don’t want to be hosed by their own government.
I don’t smoke or drink soda so I don’t pay these taxes directly, but the city isn’t an island (although the city council acts as though it were) so anyone who wants to avoid them can simply by crossing the city limits. And they do. And not just to avoid these taxes. Move to the ‘burbs and you’ll avoid the city’s wage tax, School District Income Tax, the U&O tax, parking taxes higher than in New York City, the extra 2% sales tax, and myriad business regulations that apply nowhere else.
I don’t drink aoda, but I do drink diet Pepsi. I have bought NO diet Pepsi in the city since the tax. I go to the Acme on the Montco side of City Ave, or buy in NJ when I am there.
Any damn fool could have predicted the result.
P.S.: The cigarette tax lead me to quit smoking. Thanks, Michael Nutter.
It’s not the money the tax represents, it’s the principle.
As you know I worked against this tax and still work for various entities in the industry. I will tell you the drop in sales is an illusion as people are going to the suburbs to buy the products and do their shopping. But of course, that is only if you have a car or an easy public transportation trip. So not only is the City losing out on business and tax revenue with this tax, but its regressive nature is a punishment to the people who can least afford it. And remember, this tax covers over 400 products. The move to the suburbs is documented in several studies not financed by industry.
One point that I like to make is that while Kenney said that the soda tax money was for specific programs like pre-K programs and Rebuild, not one penny of that money was set aside into a special fund for those purposes. 100% of the soda tax money went into the general fund, which means that it is fungible. It can be used any time for anything that city council wants to allocate it for.
And speaking of regressive and punitive taxes!! The premium charge for exclusive union work!
The smartest and most ethical way for our taxes to buy more, build more, be fair to taxpayers, and be fair to everyone, (such as for building those Pre-K schools as one of thousands of examples,) is if our new administration required that every project or job funded by taxes be bid openly between union and non union providers of that service. The premium cost unions add on top of the fair cost to do any job is unconscionable and every citizen has to pay for that.
The insanity of it all is that many of our union contractors lower their bid prices outside Philadelphia where union rates are not protected by our own politicians to have a chance to win bids out there against the expert non union competitors who are bidding fairly and are not allowed to overcharge their customers.
Let us hope our new administration will put Philadelphia’s house in a smarter, more competitive and more ethical order instead of just always raising taxes and inventing silly new taxes like the soda tax.
If they put a dumbass tax on city politicians, they’d be out of the red in a week! 🙂
How about the City put a tax on these 25 hour a day candy stores in Northeast Philadelphia.Popping up everywhere they are fronts for Jihadists selling untaxed ,unlicensed marijuana.
The state legislature under Republicans never fully funded it’s public education obligations. The 🤡 in Harrisburg always shortchanged public education. But then again, Republicans are only for corporations and the wealthy.
According to the inky philly spends $22900 per pupil per year in the schools. Higher than in Australia and every single eu country except tiny Luxembourg. To me $22900 is enough to provide a decent education
Lower Merion spends $36000/yr. BYW, things cost more in America.
Money raised by their high real estate taxes. Granted they still get the same state funding as Philly, but they produce with their funding.
Take a look at the quality of their schools, their student testing results, graduation rates and percentage of students going to college.
If the City of Philadelphia was given an extra $13,000 per student they would most likely increase the salary of the superintendent as their first act and blow the rest of the funding, leaving their students behind.
Why are private schools able to obtain greater results with similar tuition as Philadelphia spends per student or less.
Maybe, Mr.Cadwalder’s post is also relevant to the Teachers Union.
Private schools like Abington Friends charge $45,000/yr. Check out what Friends Select charges. Private schools charge far more and are more selective than public schools who gave to take all students, not just a privileged few.
And people like you always attack teachers. Why don’t you teach your own children?
Mr. Cadwalader, unions built the middle class. Thanks to unions workers have a 40 hour work week, days off, health insurance, and pensions. You must be a Republican who wants to return to 12 hours a day, 6 days a week, no benefits and child labor. Both of my parents were Teamsters and we had health, dental, and eye care. Oh, and they had pensions, too. You obviously want to return to the gilded age where people like Carnegie & Frick made millions off the backs of very underpaid and overworked labor who could be fired at will. You must be a Republican.
I guess it would be a stretch if Mr.Cadwalder was hoping that opening up competition to non union contractors would benefit the ability for City of Philadelphia to compete with the suburbs.
Nah, he wants to recreate the robber barons of the early 1900’s, damn Republican.
Unions are great, period.
I think it should be renamed a “Health Tax” as although it does not raise the expected funds, it encourage soda drinkers to drink less often or not at all. Glass of Milk, please.
It was not marketed as a health tax. When Nutter tried that, it failed. More honest would have been a “sin tax” as the city did with smoking and alcohol.