This time last year I wrote about the anniversary of Philadelphia’s regressive soda tax. And while I don’t love recycling blog topics, I can’t let the second anniversary of this unvoted tax go unnoticed. So how does city government top a 1,192-job loss and $80 million free fall in GDP? More lost sales and shuttered stores.
Let’s unwrap the second- year anniversary “gifts” this tax plopped onto the City of Brotherly Love. The first gift (nonreturnable!) is continued sales loss for Philly supermarkets. According to a recent study by St. Joe’s University professor John Stanton, the tax on beverages (sweetened and calorie free alike!) costs merchants $100,000 per month in lost sales.
As we discussed last year, the lost sales are not just soda, they seep into other grocery staples. Customers who have transportation are abandoning city markets for the suburbs where they can buy their favorite beverages without paying this tax. Oh, and while they are in the leafy suburbs, they also stock up on bread, vegetables, paper goods, etc. In other words, they do all their shopping outside the city. A rigorous Oxford study published last year thin sliced the data to reveal beverage sale slumps of 24 percent in Philly and a 14 percent uptick in sales outside Philly.
And what about people who don’t have transportation to the land of huge parking lots and a Starbucks on every corner? These are the shoppers who walk or a catch a bus to shop in Philly. They face higher prices for their favorite beverages and price hikes on other groceries retailers reluctantly pass along to their shoppers to counter some of their lost sales.
Unfair? Absolutely. A group of Philadelphia pastors urged politicians to “work with community organizers and small business owners, not against them.” They spoke out specifically about a tax they believe does “more harm than good.” (Rev. Jay Broadnax, Rev. Dr. William B. Moore and Bishop J. Louis Felton, et. al., “20 Philly-area black clergy: Beverage tax harms our community and businesses,” Philadelphia Inquirer, 11/26/18).
The second unwanted anniversary gift hit ShopRite owner Jeff Brown hard. He warned that Philly supermarkets, already a scarce resource in the city, would be unfairly burdened by the tax. Unfortunately, but not surprisingly, the anniversary gift he unwrapped was a bitter decision to close one of his stores. This is the same owner who saw all his city stores lose an average of 15 percent in sales (sales of all goods, not just soda) and his formerly profitable Overbrook store lost $1 million with a 23 percent downturn.
So, Philadelphia continues its sad march towards more job loss and regressive policies that hurt real people. The lesson? Ohio policymakers should avoid the “gifts” of any taxes or bans that threaten local retailers and burden hardworking Ohioans. Because some gifts just can’t be returned.