Philadelphia Soda Tax Leads To 30-50% Plunge In Sales, Mass Layoffs

[Right_in_Virginia]

Philadelphia Soda Tax Leads To 30-50% Plunge In Sales, Mass Layoffs
Zero Hedge, Feb 22, 2017, Tyler Durden

When Philadelphia became the first US city to pass a soda tax last summer, city officials were eagerly looking forward to the surplus-tax funded windfall to plug gaping budget deficits (and, since this is Philadelphia, the occasional embezzlement scheme). Then, one month ago, after the tax went into effect on January 1st we showed the tax applied in practice: a receipt for a 10 pack of flavored water carried a 51% beverage tax. And since  PA has a sales tax of 6% and Philly already charges another 2%, the total sales tax was 8%. In other words, a purchase which until last year came to $6.47 had overnight become $9.75.



What happened next? Precisely what most expected would happen: full blown sticker shock, and a collapse in purchases.

According to Philly.com reports, two months into the city’s sweetened-beverage tax, supermarkets and distributors are reporting a 30% to 50% drop in beverage sales and - adding insult to injury - are now planning for layoffs.

One of the city's largest distributors told the Philadelphia website it would cut 20% of its workforce in March, and an owner of six ShopRite stores in Philadelphia says he expects to shed 300 workers this spring. “People are seeing sales decline larger than anything they’ve seen up to this point in the city,” said Alex Baloga, vice president of external relations at the Pennsylvania Food Merchants Association.


More:  http://www.zerohedge.com/news/2017-02-22/philadelphia-soda-tax-leads-30-50-plunge-sales-mass-layoffs

[Oceander]

I'll bet surrounding towns are, collectively, showing a comparable upturn in sales. 

[thackney]

There are other options to consider for the subjects in Philly.

Sports Drinks Are Now More Expensive than Beer Thanks to the Philadelphia Soda Tax
https://taxfoundation.org/sports-drinks-are-now-more-expensive-beer-thanks-philadelphia-soda-tax/

[Wingnut]

Liberal Douche nozzle and Mayor Kenney harshly rebuked reports of coming layoffs late Tuesday night.

"I didn't think it was possible for the soda industry to be any greedier," Kenney said in an emailed statement. “…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."

[Victoria33]

  I'll bet surrounding towns are, collectively, showing a comparable upturn in sales.

@Oceander

This is the free market working.  Put a high tax on something and people won't buy it.  They will find a substitute, and/or, as you say, when they go outside the tax district, they will buy it there.

[240B]

Liberal Douche nozzle and Mayor Kenney harshly rebuked reports of coming layoffs late Tuesday night.

"I didn't think it was possible for the soda industry to be any greedier," Kenney said in an emailed statement. “…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."

What a fool. Like most Liberals, he is unable to comprehend simple economics. It is not their fault that you decided to tax them into bankruptcy.


If they pass the tax on, they sell less products. If they sell less products then their bonuses are smaller. Idiot.


So this whiney crybaby screed about 'it's not my fault' is pure bullshit. It is your fault. You own it. Now be a man and own up to what you supposedly believe in.

[Frank Cannon]

Liberal Douche nozzle and Mayor Kenney harshly rebuked reports of coming layoffs late Tuesday night.

"I didn't think it was possible for the soda industry to be any greedier," Kenney said in an emailed statement. “…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."

I often wonder if Philthy can elect a worse POS Mayor then they have and then they go a prove that they can. This fat slob Kenney is a complete moron and it is great to see this explode in his face.

I got a dollar that he proposes fines and more taxes to offset this disaster.

[geronl]

They even put the taxed on flavored bottled water!!

omg

It's not hard to cross the city limit line to buy soda

[geronl]

Liberal Douche nozzle and Mayor Kenney harshly rebuked reports of coming layoffs late Tuesday night.

"I didn't think it was possible for the soda industry to be any greedier," Kenney said in an emailed statement. “…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."

What a complete imbecile.

[Oceander]

@Oceander

This is the free market working.  Put a high tax on something and people won't buy it.  They will find a substitute, and/or, as you say, when they go outside the tax district, they will buy it there.

Exactly. 

[Oceander]

Liberal Douche nozzle and Mayor Kenney harshly rebuked reports of coming layoffs late Tuesday night.

"I didn't think it was possible for the soda industry to be any greedier," Kenney said in an emailed statement. “…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."

Somebody doesn't understand Econ 101

[andy58-in-nh]

Liberal Douche nozzle and Mayor Kenney harshly rebuked reports of coming layoffs late Tuesday night.

"I didn't think it was possible for the soda industry to be any greedier," Kenney said in an emailed statement. “…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."

It is hard to imagine true economic illiteracy until one hears it. And it is all the more striking coming from a supposed adult with something more than a 2nd-grade education. But then again, it's a Philadelphia Democrat we're talking about here...

Honestly: this cretin has not the slightest idea that if a manufacturer lowered their prices to their distributors by an amount equal to this idiotic tax, they would bankrupt themselves almost immediately, as the cost of production would far exceed their return on sales.

And here is further evidence that Democrats think of businessmen as evil incarnations of the Monopoly Man, rolling in bags of loot, stolen from the workers. 

[Jazzhead]

I'll bet surrounding towns are, collectively, showing a comparable upturn in sales.

They are.  The only soda I purchase anymore in the city is the Diet Coke I enjoy with my lunch.   The only folks left paying the tax on soda for home consumption are those too poor to be able to travel outside the city limits to buy it. 

Some in-city retailers are apparently purchasing their soda by picking it up at out-of-town distributors.  So long as the soda isn't delivered, and is picked up at the premises of the out-of-town distributor, there is apparently no obligation for the distributor to police where the soda is actually going.   (I bet that such retailers still jack up their price as if the tax was being paid).

Finally,  the threat by the six Brown's Shop Rite stores to lay off 300 people because of the soda tax doesn't smell right to me.  If they have to lay off that many, I suspect they have more problems than cratered soda sales.  if it comes to that, it will be a shame.  Brown's was operating full-service supermarkets in the urban core when no one else was.   

[Jazzhead]

Somebody doesn't understand Econ 101

Indeed!   

[Idaho_Cowboy]

Indeed!

Don't worry lots of folks tell me the government is the best at protecting our health and handling our insurance.   

[truth_seeker]

Thinks passing a tax will be borne by company not passed on to consumers?

Too bad these diverse cities, won't elect moderates or conservatives.

[Jazzhead]

Don't worry lots of folks tell me the government is the best at protecting our health and handling our insurance.   

The ACA is flawed just like the Philly soda tax because it ignores the basics of Econ 101.  No argument with you there.  The current death spiral is happening because of the rational actions of millions of younger Americans to reject ACA insurance as a bad deal.   

       

[geronl]

Finally,  the threat by the six Brown's Shop Rite stores to lay off 300 people because of the soda tax doesn't smell right to me.  If they have to lay off that many, I suspect they have more problems than cratered soda sales.  if it comes to that, it will be a shame.  Brown's was operating full-service supermarkets in the urban core when no one else was.   

Grocery stores operate on an extremely thin margin and trying to do that in the inner-cities is especially hard. Trying to do that in urban areas where the government does it's best to make it hard to do business is enough to make a business relocate.

Remember that Brown sought out state subsidies before he opened them. he also did a massive amount of market research on how to sell healthier, fresher food to those customers. Like grilling the chicken in the store where people can hear the sizzle and smell it, or have the pizza made right there in front of the customer. They learned from failures in other cities.

Some of them have bars now, "Beer Gardens".

---

When Dallas subsidized a grocery store in downtown (where few actually live) the store kept asking for more money from the city.

[Joe Wooten]

They even put the taxed on flavored bottled water!!

omg

It's not hard to cross the city limit line to buy soda

They will make that illegal for Phiily residents and enforce it with roadblocks at the city limits to search every car for imported sody pop. Hizzonner Kenny will teach those ungrateful bastards who's in charge.

[geronl]

They will make that illegal for Phiily residents and enforce it with roadblocks at the city limits to search every car for imported sody pop. Hizzonner Kenny will teach those ungrateful bastards who's in charge.

walls around every city

Yes! We can Make America Medieval Again! (Okay, not "again")

[Gefn]

They even put the taxed on flavored bottled water!!

omg

It's not hard to cross the city limit line to buy soda

Sure. Businesses in Trenton , Lawrenceville,etc, in Mercer County NJ right across the river will boom. There are Costcos, Sam's Clubs and BJ's all within a 20 mile radius of Philly if you go over the river.

The other day I saw someone buy 39 bottles of pop on sale in front of me at my local Stop and Shop. I didn't make the correlation until now. Maybe he was from Philly. Or he was throwing a party. But all he bought was 39 bottles of cola, on sale for 89 cents each.

Maybe he's going into Philly and selling it from his truck?   

[thackney]

Sure. Businesses in Trenton , Lawrenceville,etc, in Mercer County NJ right across the river will boom. There are Costcos, Sam's Clubs and BJ's all within a 20 mile radius of Philly if you go over the river.

The other day I saw someone buy 39 bottles of pop on sale in front of me at my local Stop and Shop. I didn't make the correlation until now. Maybe he was from Philly. Or he was throwing a party. But all he bought was 39 bottles of cola, on sale for 89 cents each.

Maybe he's going into Philly and selling it from his truck?

Going to Camden for some coke takes on a new meaning.

[Jazzhead]

Going to Camden for some coke takes on a new meaning.

 

[Sanguine]

Liberal Douche nozzle and Mayor Kenney harshly rebuked reports of coming layoffs late Tuesday night.

"I didn't think it was possible for the soda industry to be any greedier," Kenney said in an emailed statement. “…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."

Did he really say that?     

[Oceander]

Sure. Businesses in Trenton , Lawrenceville,etc, in Mercer County NJ right across the river will boom. There are Costcos, Sam's Clubs and BJ's all within a 20 mile radius of Philly if you go over the river.

The other day I saw someone buy 39 bottles of pop on sale in front of me at my local Stop and Shop. I didn't make the correlation until now. Maybe he was from Philly. Or he was throwing a party. But all he bought was 39 bottles of cola, on sale for 89 cents each.

Maybe he's going into Philly and selling it from his truck?   

I agree with the last point.  They have probably single handedly created a black market for sodas.