Philadelphia Soda Tax Collection Millions More Than Expected

The city took in $3.4 million more than it projected in the tax's first month in effect

Philadelphia released new figures Thursday morning the show the city took in millions more from its so-called "soda tax" than was expected.

Figures for January collections doubled the original estimates. The city took in $5.7 million in January – way more than the city manager's projection of $2.3 million for the first month the tax was collected, the city’s Revenue Department said.

"The preliminary total of $5.7 in revenues for the first month of the Beverage Tax is very good news," said Marc Stier, director of the Pennsylvania Budget and Policy Center.

The new totals counter the assessments of store managers and beverage distributors -- who've said the soda tax has deeply cut into their sales. Some have even threatened layoffs due to the cost of the 1.5-cents-per-ounce tax on sugary beverages.

"This monitoring protocol isn’t about punishing businesses," said revenue commissioner Frank Breslin. "It’s about helping make sure everyone is doing what they are required to do so everyone can avoid penalties and, ultimately, so we can fuel bigger and better things for the people of Philadelphia."

Revenue from the tax is set to go toward pre-K, community schools, parks and recreation and libraries, the city said.

The city may be happy with the tax haul so far but it will need to collect more than $5.7 million in future months if it hopes to achieve its projection of $91 million gained from the tax by year’s end.

The city expected slower collection at first because any inventory on hand on Jan. 1 wasn’t subjected to the tax.

"There is always a lag in revenues when taxes of this kind are instituted," said Stier. "Reasons for this can include the time that distributors need to gear up for new tax, and the possibility that some of their inventory on-hand is not taxed. That the first month’s Beverage Tax revenues are so high is reason to believe the goal for the year will be met."

The Ax the Bev Tax Coalition issued a statement in response to beverage tax collection numbers:

"Regardless of how much money the administration says it collected in the first month of this tax, the pain Philadelphia families and businesses are feeling is very real," the statement said. "The beverage tax is causing prices on thousands of items to skyrocket, sending shoppers outside the city and forcing steep declines in sales. This in turn hurts the restaurants, supermarkets and corner stores that are the cornerstones of our communities. This steep drop-off in sales is already causing layoffs and a reduction in hours in family-sustaining, union jobs. For the working families paying drastically higher prices and the businesses impacted by the tax, the pain is only going to worsen over time."

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