The Democratic mayor of Philadelphia is touting the success of the city’s beverage tax and lashing out at the “greed” of retailers as sales crater by as much as 50 percent.
City officials say the unpopular soda tax is already exceeding expectations, raking in $5.7 million in revenue in January. The revenue is more than double what officials estimated, which goes towards early childhood education programs in the city. Despite the supposed success of the policy, sales among retailers are getting crushed. Stores are reporting beverage sales down 30 to 50 percent and are planning layoffs to cope with the costs, reports CBS News.
The announcements from multiple stores of impending layoffs is provoking the ire of Mayor Jim Kenney, who appears confused why businesses are not choosing to eat the added costs. Kenney views product price hikes and layoffs due to the tax as a choice by businesses to punish the city and its residents for the policy.
“I didn’t think it was possible for the soda industry to be any greedier,” Kenney told Philly.com Tuesday. “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 cents per ounce tax on sugary drinks is implemented at the distribution level, meaning retailers must choose how much of the cost to pass onto consumers at the shelves. Small corner stores and markets report being hit hardest because they can’t shift inventory like larger chains to offset costs.
Representatives of the Pennsylvania Food Merchants said city businesses are experiencing “sales decline larger than anything they’ve seen.”
“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,” Mike Dunn, a spokesman for the mayor, told Philly.com.
One distributor in the city recently announced plans to layoff 20 percent of their workforce by the end of March. The owner of several Shop Rites in the city is planning on cutting roughly 300 jobs in the coming months to offset costs.
Many residents said they are going to start shopping for their beverages out of the city to avoid the onerous tax. The mayor continues to defend the move, arguing it is the choice of retailers to pass the added costs on to their customers, deflecting responsibility.
Prices are doubling on certain products due to the tax. A 12-pack of Lipton Diet Green Tea at Save-A-Lot in the city is now priced at $8.03, instead of the $4.99 it costed in December.
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