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More Soda Tax News

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Over the last two years we have reported extensively on the progress of the “soda tax” concept from Washington to Philadelphia and all the states and cities in between! The passage of the Beverage Tax in Philadelphia was a significant shift in the battle for healthier habits, and now there is further news to share with you. The early impact of the Philadelphia tax on sweetened beverages has just been released in the September publication of the National Bureau of Economic Research.

The message is not what those who supported the 2016 tax had hoped for. 

When promoting passage of the Beverage Tax in 2016, a direct correlation was made between soda consumption and unhealthy life styles.  The expectation at the time was that sales would decrease and the overall health of Philadelphian would increase as a result of raising the price of artificially sweetened beverages. 

But that is not what the newly released research shows.

Yes, soda purchases have dropped in Philadelphia, but the sales outside of the city limits has increased. Instead of a healthier Philadelphia, there is just a shift in buying patterns. Soda is still being consumed in the same numbers even as consumer traffic has changed.

This is the scenario that those who opposed the law had originally predicted.

In fact, shoppers have not starting purchasing healthier beverage substitutes in lieu of sweetened sodas. Instead, they are simply driving to other areas, causing significant sales loss to those markets within the Philadelphia city limits where the price hike is having a negative influence. Jeff Brown, owner of a ShopRite location in western Philadelphia is blaming the Beverage Tax for the sharp decline in sales at his store, which is resulting in its unfortunate closure.   

Check back periodically - we will keep you informed of the evolving conversation.

This so-called soda Tax has been controversial from the start and has undergone a wide range of challenges over the time it has been enacted into law. We will continue to monitor it, especially regarding the negative impact of dropping sales on Philadelphia retailers.

For more information please contact Chris Martin, CPA, SobelCo at chris.martin@SobelCoLLC.com

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