Philly Soda Tax Creates Black Market for Sugared Drinks

The tax on sugared drinks has triggered the sale of contraband soft drinks.

March 16, 2018

PHILADELPHIA – With sodas costing more than the city’s famous cheesesteaks, a thriving black market has sprung up for sugared drinks, Stuff reports.

Danny Grace, secretary-treasurer for the Teamsters union, said that union members often show him photos they’ve snapped while on deliveries of vans crammed with Pepsi, Mountain Dew, Coke and Red Bull—all reselling soda bought from untaxed suppliers outside the city limits.

"They're going to distributors, to bars, they're going wherever they can and selling it. There's no tracing it at that point,” he said. “We know they're coming outta Maryland. We know they're coming outta Virginia. We think they're coming outta New York.”

Philadelphia Mayor Jim Kenney has agreed that such a soda black market exists, but contended that most businesses—and customers—are paying the tax. “However, we know that some may not be, and we built into our revenue projections a 10% non-compliance rate,” Kenney said. “The fact that we raised $60 million over nine months makes clear that while black market activity exists, it is not widespread.”

The city estimated the soda tax would generate $7.7 million monthly, but actual revenue has hovered between $6.5 million and $7 million, with fluctuations month-to-month. For more on soda taxes and how they impact the convenience store industry, read “A Costly Pour” in the October issue of NACS Magazine.