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By: Elias J. Atienza
After Philadelphia decided to place a tax on sweetened beverages, soda companies, supermarkets, and distributors are losing 30 to 50 percent drop in sales and some are planning to cut employees according to Philly.com.
One of the city’s largest distributors, Canada Dry Delaware Valley, is planning on laying off 20 percent of their employees due to sales being down by 45 percent. Another company, Brown’s Super Stores, has had to cut over 6,000 hours due to a 50 percent drop in beverage purchases. The CEO, Jeff Brown, believes he will lose up to 300 employees in the coming month, which is 20 percent of his workforce.
The Mayor of Philadelphia, Jim Kenney, seemed dismissive of the reports and attacked the soda industry as becoming “greedier” and trying to stop the spread of the tax to other cities. The city also questioned the figures.
“I didn’t think it was possible for the soda industry to be any greedier,” Kenney said in an emailed statement to Philly.com. “ … They are so committed to stopping this tax from spreading to other cities, that they are not only passing the tax they should be paying onto their customer, they are actually willing to threaten working men and women’s jobs rather than marginally reduce their seven-figure bonuses.”
Soda consumers are shopping outside of Philadelphia where the tax doesn’t apply, though the city believes that they will return to shopping within city limits.
“Initially people are upset and drive over the city line, but then they do the math and realize the cost of gas or the pure inconvenience doesn’t make it worth it,” spokesman Mike Dunn said.
Philadelphia was planning on using the soda tax to fund a new pre-K program in the city’s public schools. It would have to collect $7.6 million a month in order to be fully funded; however, only $2.3 million has been collected so far.
However, the city believes that some stores and restaurants stockpiled soda before the tax came into effect and sold them untaxed. This would lower revenue at first, but would also mean once the supply runs out, the stores and restaurants would start selling taxed sodas. This would lead to an increase in revenue; however this would also mean collections would to nearly triple in order to reach expected levels.