Philadelphia Soda Tax Causes Store Closure

At least one supermarket is calling it quits after a continued decrease in sales.

January 08, 2019

NEW YORK – When Philadelphia passed its soda tax in 2016, Mayor Jim Kenney said the tax dollars would be used to improve public health while funding universal pre-K, reports the Wall Street Journal. The 1.5 cents-per-ounce tax is also being blamed for the closing of a local supermarket.

The Journal notes that proponents say the soda tax is a tax on distribution. However, the tax actually “functions like a regressive consumption tax as retailers pass the cost onto consumers.” The news source also questions where the money is going: From its implementation date of Jan. 1, 2017, to Sept. 30, 2018, the city raised more than $137 million from the soda tax, with more than $101 million of those profits going into the city’s general fund, and less than one-fourth to pre-K funding. Within five years, the city will supposedly devote “more than 100% of the revenues” from the soda tax to universal pre-K and other promised accounts.

The WSJ also reports another economic consequence of the soda tax: on January 2, Brown’s Super Stores announced the closure of a ShopRite store in West Philadelphia. Customers discovered they could avoid the soda tax by shopping outside of Philadelphia, and as a result, store sales declined 23% since the tax took effect. Other stores in the city have seen a decline in profits of around 15% and store owners have had to shrink their workforce.

Read more on the negative impact of soda taxes in the NACS Magazine feature, “A Costly Pour.”