Philadelphia soda tax harming businesses, says city's lame duck controller

Philadelphia’s new sweetened beverage tax has had "detrimental effects" on drink sales, according to a business survey released Monday by City Controller Alan Butkovitz.

Eighty-eight percent of 741 Philadelphia businesses that responded to the survey reported year-to-year revenue losses since the city’s 1.5 cents per ounce tax on sugary beverages went into effect on Jan. 1. Nearly 60% of businesses said they have incurred declines more than 10% and 62% of respondents attributed “most” or “all” of the drop to the beverage tax.

“The overwhelming majority of businesses that carry products subject to the Philadelphia Beverage Tax feel a significant impact as a result of the tax,” Butkovitz said in a statement. “The tax has had detrimental effects.”

Lauren Hitt, communications director for Mayor Jim Kenney, said that Butkovitz’s survey was not impartial since the controller has been an outspoken critic of the tax.

Butkovitz is a lame duck after losing a Democratic primary to Rebecca Rhynhart, a former chief administrative officer under Kenney. His term ends Dec. 31.

Philadelphia fell short of its $46 million goal for the first six months of the year, but has kept its forecast for $91 million of revenue for the 2018 fiscal year that began July 1 and $450 million for a five-year period.

“We’ve also found that the tax has had many positive economic impacts, which this survey doesn’t take into account,” Hitt said. “Sadly, all of this progress would go away if the controller was successful in his efforts to repeal the tax.”

Hitt noted that the tax has allowed for the city expand pre-kindergarten as well as upgrade infrastructure. The city is planning to earmark revenue from the tax toward debt service on $300 million in bonds to enhance parks, libraries and recreation centers.

The controller’s office contacted 1,600 Philadelphia businesses including grocery stores, convenience stores, restaurants, bars and retail establishments.