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Nation & World

"Soda tax" stakes escalate in pivotal Philadelphia fight

PHILADELPHIA (AP) – Less than 3 months into Philadelphia’s new tax on sweetened drinks, the stakes have escalated: Beverage makers say the measure is hurting sales so much they need to cut jobs, while city officials say the moves are a ploy to get the tax struck down.

Some supermarkets opposed to the tax are making a statement by printing out the added cost on receipts and store shelves. The tax began Jan. 1 and is levied on transactions between drink distributors and retailers, but many grocers are passing it on to drinks amid an “Ax the Bev Tax” campaign to kill the measure in court or through repeal. One widely shared photo on social media shows a receipt for a 12-pack of 16.9-ounce bottles of Propel Water, which is artificially sweetened. The receipt says the drinks cost $5.99, and the tax adds $3.04.

IGA supermarket has hung signs near affected drinks that say “Philadelphia Sugar Tax Item,” with the price of a 2-liter of Coke going from $1.99 to $3.

“I just can’t afford it,” said Margaret Atkinson, who was shopping at the supermarket this week. Atkinson said she has switched to generic brands and is asking a nephew in the suburbs to pick up soda for her. She’s also drinking more homemade iced tea and bottled water with flavor packets.

Philadelphia is among the first U.S. cities to implement such a special per-ounce tax. While officials touted it as a way to raise money for pre-K education – not as a health measure as in other cities – some advocates also hail it as a way to fight sugary drink consumption and obesity. For the beverage industry, which has already seen soda consumption decline for several years, overturning the tax in Philadelphia could be critical in sending a message to other cities and stopping the measures from gaining momentum.

In Philadelphia, PepsiCo says sales are down 40 percent compared to a year ago since the 1.5-cent per ounce tax took effect, and it will need to cut 80 to 100 workers. A Canada Dry bottler says sales are down 45 percent and it had to lay off about 30 employees.

Meanwhile, in Illinois, Cook County and Chicago are preparing to implement their own beverage taxes, while voters in Santa Fe, New Mexico, will decide on a measure in May.

Bloomberg Philanthropies, which supports taxing sugary drinks to reduce consumption, thinks a couple months into Philadelphia’s tax is too early to draw conclusions.

Howard Wolfson, a Bloomberg adviser, questioned PepsiCo’s decision to lay off
workers.

“Either there are pre-existing problems with the business model, or jobs are being sacrificed to make a political point,” Wolfson said.

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Choi reported from New York.

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Follow Candice Choi at www.twitter.com/candicechoi

Follow Kristen De Groot at www.twitter.com/de_kristen

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