Revenue from Philly’s soda tax on target, even as sales dip

 (NewsWorks file photo)

(NewsWorks file photo)

It’s been almost three months since Philadelphia’s 1.5 cents-per-ounce tax on soda and other sweetened drinks took effect and city officials said it continues to bring in the dough.

Preliminary figures show the tax brought in $6.4 million last month — ever-so-slightly higher than the city had estimated. In January, the city collected $5.9 million. 

That’s good news for the Kenney administration, which is banking on that revenue for big projects like expanding subsidized pre-K and a major revamp of city parks, recreation centers and libraries.

But it comes as grocery stores and soda distributors said sales have plunged by as much as 30 to 50 percent. The tax is levied on distributors, but many are passing the cost on to their customers, including supermarkets, corner stores and restaurants. 

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A spokesman for Mayor Jim Kenney said the city’s Revenue Department has already factored a 27 percent cut in consumption into its revenue projections.

“People will be drinking smaller portions and probably drinking less, but apparently the numbers seem to be holding as what we thought they would be,” said Kenney. “So it would indicate that our expectations on the dropoff in consumption is accurate and theirs is a bit inflated.”

“Our predictions and in fact, the mayor’s predictions are coming true,” said Anthony Campisi, a spokesman for “Ax the Philly Bev Tax” — the coalition backed by major soda companies fighting the tax in court.

While the industry is not disputing the city’s revenue numbers, it is taking umbrage at Kenney’s remarks and insists the tax’s impact on customers and businesses is no exaggeration.

“Prices have gone up for families at the checkout line, the tax has forced layoffs and cuts in hours,” Campisi said.

Earlier this month, Pepsi announced it would be laying off as many as 100 workers at three of its plants and will no longer sell 12-packs and two-liter bottles in Philadelphia.

A panel of Commonwealth Court judges is scheduled to hear oral arguments on the legal challenge to the tax in Pittsburgh on April 3.

In the meantime, the Kenney administration said it needs to continue stepping up collections to stay on track. The tax is expected to generate $46 million for this half of the fiscal year and $91 million each subsequent year.

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