According to recent published reports, Philadelphia’s new soda tax is putting a significant dent in overall grocery sales and forcing retailers to reduce labor as consumers are shifting their shopping to locations outside the city.
The tax is levied on distributors at the rate of 1.5 cents per ounce and covers any beverage containing sugar or artificial sweeteners (except 100% fruit juices and cow’s milk).
Jeff Brown, CEO of Brown Super Stores, which operates six supermarkets in Philadelphia and six in the suburbs, said total sales in his city stores have fallen 15 percent since the tax took effect, with beverage sales falling more than 50 percent.
If the sales declines continue, Brown worries that the tax could cause a reversal of the recent progress made in eliminating food deserts, since many customers are leaving their low-income neighborhoods to shop.
In addition, Brown projects that he may have 300 fewer employees by the end of the first quarter than he had the same time a year ago.
According to a spokesperson for the Philadelphia Mayor’s office, an initial drop in sales was expected, but normal shopping patterns are anticipated once people get used to the new pricing. $92 million in revenue from the tax is projected, which is to be used to fund pre-Kindergarten education programs, community schools, and city parks and recreation programs.
New soda taxes have also been implemented in Illinois, Colorado and California, and a proposal in Seattle, WA would tax sugared beverages at 2 cents per ounce, if passed.