While the controversial “soda tax” passed by Philadelphia City Council continues sparking heated debates there, Delaware County residents are lesser known casualties of the landmark legislation because we’re paying more for fizzy, sugary drinks, too.
To compensate for what they claim are significant losses directly attributed to Philly’s soda tax, soda manufacturers have raised wholesale prices to retail distributors who, in turn, sell directly to the public.
In Philadelphia, the new mandate applies a 1.5 cents-per-ounce tax on sodas, fruit drinks, sweetened iced teas, and juices that contain less than 50 percent real fruit. Essentially, the tax adds about $1 to the price of a two-liter soda and more than $2 to the cost of a 12-pack of canned soda.
According to a recently published report in the New York Post, since the tax went into effect on Jan. 1, consumption of sweet drinks in Philly is off by as much as 50 percent, according to retailers, and soft drink makers have reported huge losses and announced layoffs.
Delaware County retailers are feeling the pinch, too, although some are trying to seize an opportunity for more sales.
In Glenolden, Rite Aid on Chester Pike has posted a sign in its parking lot proclaiming, “Tax-Free Zone. Stop In, Stock-Up. Beverages in this store are not subject to the beverage tax.”
Even still, store manager Sean Evanson said the prices of one and two-liter bottles of soda have increased by as much as 29 cents in an attempt by the soda companies to recoup some of their losses from Philadelphia.
Jay Patel, owner of Brewer’s Outlet, a beverage distributor in Woodlyn, has also felt the impact.
“Yes,” he said emphatically, “they have increased their cost anywhere from five-to-10 percent.” Patel said he absorbs as much of the increase as he can because he doesn’t like to keep raising prices on his customers.
As for actual increase in sales, neither retailer has seen any movement in that direction.
Patel believes people from Philadelphia travel to Delaware state where they don’t have to pay any tax rather than come to Delaware County where the tax is reduced.
Sales tax in Philadelphia is eight percent. Sales tax in Delaware County is six percent. There is no sales tax in the state of Delaware.
“In this soda tax situation,” said Patel, “the state of Delaware is the winner. “
Philadelphia Mayor Jim Kenney is adamant that the soda tax will generate significant revenue to create more Pre-K funding for the city but jobs appear to be the biggest losers.
The Post report said PepsiCo blamed a 43 percent drop in business on the new tax and announced it would lay-off 80 to 100 area employees (out of 423) over the next few months. Similarly, Canada Dry gave pink slips, effective March 5, to 25 of its workers.
Retailers are also feeling the pinch, according to Jeff Brown, owner of Brown’s Super Stores, saying he expects to ax 300 employees at his company’s six Philadelphia ShopRite stores this spring, including the store closest to Delaware County in the city’s Eastwick section.
Lauren Craig, Coca-Cola’s senior manager of Public Affairs and Communications, said while Coke has been impacted by the tax, the impact has not yet resulted in layoffs but the company will not make any new permanent or seasonal hires and some 40 positions made vacant by retirements will not be filled.
“In retail and grocery stores, our volume is down 32 percent year-to-date in the city and dropping further each week,” said Fran McGorry, president and general manager of the local Coca-Cola bottler known as Philly Coke, adding that sales of low-and-no calorie beverages, are down close to 50 percent in Philadelphia. Teas and sports drinks also dropped 33 and 39 percent, respectively, year-to-date for the local bottler.
Delaware County Councilman John McBlain said the county has no intention of creating or imposing a beverage tax.
“It seems a shame to me,” he said, “that the very people that thing was created to help, hurts them. But I believe I can speak for the other four members of Council when I say we aren’t looking to do that here.”