Beverage Taxes As Job Killers: Philly Pain Continues

As my colleagues around the country grapple with beverage tax threats, I think a little perspective and a large dose of reality is in order. Some government bureaucrats tout “soda taxes” as a quick way to make people healthier while fattening government coffers. When you really look at these claims, their arguments fall apart, consumers pay the price and small businesses and their hard working employees pay with job loss.

First, the claim that taxes somehow make people healthier is not supported by science. Singling out one type of product or eliminating it from one’s diet does not produce measurable results. All sweetened beverages combined (soda, juices, etc.) account for less than 6% of average daily caloric intake. If you wiped out that entire 6%, the results would barely register on a bathroom scale.

Instead, what is verifiable is that obesity and obesity-related health issues have continued to rise for years while calories from soda consumption dropped steadily at the same time (a 23% reduction in average calories per serving from beverages between 1998-2010 alone). All calories count and education, not taxation has proven the most effective way to reform eating habits.

So if sweetened beverages are not a unique variable driving America’s weight challenges, why do some government bureaucrats continue to cherry-pick products like soda to tax? Short term, cities are gobbling up the soda tax money. Long term? The mess in Philadelphia tells the tale of a beverage tax that caused prices to skyrocket on consumers and is now taking a serious toll on jobs in the city.

According to recent news accounts, Philadelphia small business owners have seen a drop in beverage sales and, more dramatically, a drop in all sales as people leave the city to shop. What shopper wants to pay more for a sports drink than beer? So they drive on–literally. Counties outside Philly have seen sales on all items increase. And this is only two months into the tax debacle.

Where does this leave struggling city businesses? Jeff Brown, the CEO of Brown’s Super Stores (a chain of ShopRite stores in Philly) has cut 20 jobs due to poor sales and estimates a 15 percent drop in overall sales since the unvoted soda tax was forced onto the City of Brotherly Love on January 1. Mr. Brown astutely observes that people “didn’t change what they drink, they changed where they’re buying it.”

One prominent beverage distributor, Canada dry Delaware Valley is planning to lay off 20 percent of their sales team in March. A Philly Teamsters rep, Danny Grace, estimates that some of his members who drive trucks have seen 70 percent pay cuts as sales in the city decrease. Real people, real pain.

So we all watch Philly struggle as their mayor defends his unvoted tax, and state legislators in Pennsylvania line up to support a claw back on these discriminatory taxes. If their mayor won’t listen to consumers and small business owners, perhaps their message will resonate in other areas of the country where jobs are valued and people are left to make informed choices about what to eat, drink and feed their families.

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