Industry Fights ‘Devastating’ Philly Bev Tax
Faced with plunging sales following the implementation of a controversial beverage tax that took effect in Philadelphia at the beginning of the year, local retailers and their beverage industry partners have responded with a campaign aimed at educating consumers and ultimately repealing the measure.
The recently launched campaign, Ax the Bev Tax, has already attracted almost 20,000 members to its Facebook page, according to Alex Baloga, VP of external communications at the Camp Hill-based Pennsylvania Food Merchants Association (PFMA).
In an interview with Progressive Grocer, Baloga said that the grass-roots campaign, which consists of social media and “on-the-ground” efforts, as well as collateral materials available at affected retailers, encourages consumers to contact their elected officials to express their dissatisfaction with the tax.
“I don’t think we’ve seen the full effect of this tax yet,” Baloga told PG, noting that beverage sales have declined as much as 50 percent at affected retailers, who have described the measure as "devastating." For instance, local grocer Jeff Brown, president and CEO of Brown’s Super Stores, said he might need to cut as many as 300 jobs at his stores.
In the area of job losses, the tax has already been blamed for the layoffs of as many as 100 workers at PepsiCo and 25 at Canada Dry, with similar job cuts in the area expected from Coca-Cola, according to Teamsters Local Union 830 Secretary-Treasurer Daniel H. Grace. “This terrible news, although not surprising, is particularly disastrous for the members of Teamsters Local 830, who rely on a strong soda industry for their livelihoods.”
Making the situation even worse, noted Grace, was the union's advance warning that “predicted this dire outcome from the outset. We pleaded with city council members and our fellow union brothers and sisters in Philadelphia to stand with us against this outrageous tax, but to no avail.”
PFMA President and CEO David McCorkle made a similar comment on Jan. 12, shortly after the tax took effect. “The mayor’s regressive tax is gouging families and small businesses across Philadelphia,” he noted. “Working families and seniors living on fixed incomes … are rightfully angry because the mayor’s new 1.5 cents-per-ounce levy [has] dramatically increased prices on thousands of common beverages across Philadelphia. This tax is having a damaging impact on families as businesses are forced to pass the increased cost onto consumers — which is precisely what we predicted and what the city projected in its budget presentation to City Council.”
Baloga explained to PG that the way the tax was framed — as a way to raise revenue to fund such critical programs as pre-kindergarten and parks-and-recreation projects — may have obscured for many consumers — and even some lawmakers — the ultimate “size and scope” of the measure, which many assumed was just a “soda tax.” Instead, the measure also applies to Gatorade, flavored waters, plant-based “milks,” teas, lemonades and more. Baloga estimated that between 3,000 and 4,000 items were included in the tax.
In response to the higher prices of these items, he added, shoppers have been making their beverage purchases beyond city limits in the suburbs and surrounding counties of Philadelphia – with a certain percentage sticking around to do all of their grocery shopping in those areas, leading to a worrying overall sales drop for food retailers within the city.
While PFMA is focused on repeal, Baloga noted that Ax the Bev Tax is also interested in finding alternative solutions to Philadelphia’s pressing issues. “We understand the need to fund programs,” he said. “We just think this is the wrong approach.”