Philly Soda Tax Is Underperforming Lowered Expectations

Via Political Calculations blog,

Things aren't going so well for Philadelphia's controversial soda tax in its second year of existence, which is under threat. Let's catch up with how it's doing in 2018:

The Pennsylvania Supreme Court will weigh the legality of Philadelphia's beverage tax in a Tuesday hearing as new data show the city is drawing in less revenue from the controversial tax in its second year than in 2017.

The city's monthly revenue collections show PBT brought in $5.8 million in January and $5.5 million in February. Receipts for each month are collected by the end of the following month. The $11.3 million total is about $817,000 less than the soda tax revenue generated in the same period a year ago, when the first two months of 2017 saw the Kenney administration buoyed by PBT's strong start.

The revised yearly estimate of $78.8 million averages out to a monthly expectation of $6.5 million, an amount the Mayor's Office exclusively told the Business Journal it will hit with March revenue.

Believe it or not, there's good news here! The city did indeed hit its 2018 average monthly target of $6.5 million for the Philadelphia Beverage Tax in March 2018. Unfortunately, that was over $521,000 less than what the city collected in March 2017, where the city is now cumulatively over $1.3 million short of its reduced soda tax revenue target of $19.2 million through the first calendar quarter of 2018. The following chart shows how Philadelphia's soda tax collections are faring:

At this point of time a year ago, the city was cumulatively over $1.8 million short of its original revenue target of $21 million for the first quarter of 2017, where 2018's first quarter revenue collections are now some $3.1 million below that level.

Now, we're going to say something surprising to those who have been following our ongoing series on Philadelphia's soda tax. We don't expect that ongoing underperformance in Philadelphia's soda tax collections will continue much farther into 2018.

Accepting that we could very well be wrong, here's what we're thinking. Starting with the observation that Americans consume the lowest quantities of the kinds of beverages that are subject to Philadelphia's soda tax during the first quarter of every year, we think that Philadelphia's revenues from its controversial tax were relatively elevated in the first three months of 2017 compared to 2018 because Philadelphians hadn't yet fully worked out all the strategies that they would come to employ to avoid paying the tax back when it first went into effect. Soda tax hacking strategies that included buying beverages that would be subject to the tax outside of the city or buying packets of sugary drink mixes that were not taxed by the city and making their own sugar-laden beverages.

By the second quarter of 2017 however, many Philadelphians had become adept at avoiding the tax, where the monthly tax revenue figures from April 2017 onward would be reasonable projections for the amount of revenue that would be likely to be collected over the remainder of 2018, aside from unique factors that may affect beverage sales and the corresponding tax collections, such as abnormally hot or cool weather conditions.

And then, there's the wild card of what the Pennsylvania Supreme Court may decide, which may make the entire issue of Philadelphia's revenue collections from its controversial soda tax moot. That court heard arguments in a case challenging the legality of Philadelphia's soda tax back on 15 May 2018. At this writing, the court has not yet indicated when it will issue a decision in the case.

The Philadelphia Beverage Tax's existence is also under threat from Pennsylvania's General Assembly, where legislation that would abolish the tax has been advancing through the legislature.

One issue that has been resolved however is which purported beneficiary of Philadelphia's beverage tax would "get stiffed" should city official accept the reality that the tax would not produce the revenue they had promised it would. The designated loser turned out to be Philadelphia Mayor Jim Kenney's "Rebuild" initiative to improve public parks, libraries and other city infrastructure, which has been dramatically scaled back from promised investments.

It was only ever a matter of time. Since the mayor has proposed hiking Philadelphia's property taxes to increase funding to support the city's public schools, it's likely that the Mayor's "free" pre-K program will be able to get the funds it would need to continue and to expand from that more stable source of revenue should the Pennsylvania Supreme Court rule against Philadelphia's soda tax. The way it should have been funded in the first place, if city officials had cared more about providing services to the public more than milking additional revenue out of the city's residents.

We probably shouldn't have said that last part. Philadelphia's politicians may start thinking about taxing milk as they might seek to close a "loophole" that they purposefully created when they originally crafted the city's controversial beverage tax.

Previously on Political Calculations

We've been covering the story of Philadelphia's flawed soda tax on roughly a monthly basis from almost the very beginning, where our coverage began as something of a natural extension from one of the stories we featured as part of our Examples of Junk Science Series. The linked list below will take you through all our in-near-real-time analysis of the impact of the tax, which at this writing, has still to reach its end.

Comments

Tiwin Quantify Wed, 06/13/2018 - 18:32 Permalink

Nice talking point-and I AINT a democrat. Republicans never met a Zio banker offering further indebetness that they didnt love.

Republicans BORROW to spend more and put us farther under the ZioBanksters

What's the difference between a drunken sailor and a dem or repub?

The sailor goes back to the ship when he runs outta cash.

In reply to by Quantify

takeaction GunnyG Wed, 06/13/2018 - 17:35 Permalink

All of these taxes just Tax the people they give free shit too.

Lottery

Soda Tax

Cigarette Tax

Alcohol Tax

on and on.....Here in Oregon, we have probably 50+ ways to gamble..including electronic state run Poker Machines in nearly every bar.  So sad.  You can lose $20 in a matter of seconds.

 

In reply to by GunnyG

Froman GunnyG Thu, 06/14/2018 - 09:32 Permalink

So, just to be sure that I understand this; the Philadelphia City Council came to the conclusion two years ago (much like Michael Bloomberg did in New York City) that the routine consumption of sugary drinks are bad for the denizens of their fair City.  So to curb health issues and ensure that everyone is physically active and healthy in Philadelphia the City Council enacted a "soda" tax on all sugary beverages to reduce the consumption of these beverages and improve overall public health.

To make this even more palatable, and avoid being strung up in the gallows, the City Council and Mayor (all Democrats by the way) determined that the revenue collected from the soda tax would be used to fund educational activities for disadvantaged youth and preschoolers.  Now after two years of being enacted the politicians are shocked that the projected tax revenues are much lower than expected. 

If that is the case it appears that the tax is working as designed; it is discouraging individuals from purchasing sugary drinks within the City limits of Philadelphia.   This should be hailed by the Mayor and City Council as a YUGE legislative victory.  The lower their tax receipts are the better the tax is working to deter the sale of sugary beverages.

Obviously the philistines that are running the government in Philadelphia are completely unburdened by any knowledge of basic economic principles or mathematics.   

In reply to by GunnyG

Bigly onewayticket2 Wed, 06/13/2018 - 17:56 Permalink

It's not Friday for doom porn but unless we fix voter fraud - like NOW - we are flotsam and jetsam and completely fucked post November.

For all you who voted Trump but are disillusioned because you are impatient like me, please understand he cannot lose congress or else it is THE death blow for our country. IT'S FOR ALL THE MARBLES.

The media and assholes like deniro are getting more shrill. It is because they are completely panicked and can only double down as they cannot step away from the mic.

Speak up, red pill. Especially blacks and people on the fence. I will bet big money indictments ARE coming.  I know we are cynical it will happen, but I think yes it will.  Zero and Cankles are going down the river. It it will be her treasonous server that will do them all in.

But we probably will suffer a big FF or something as they lash out. I hope not.

Locally see what you can do about voter fraud.

The way I see it, if the real majority of people in the country want a bernie, we deserve to crash.  But we know there was massive fraud and it was all Dem.  We should not tolerate that fraud AGAIN in Nov.

You must turnout the vote for patriots.

In reply to by onewayticket2

3-fingered_chemist Wed, 06/13/2018 - 17:29 Permalink

Nothing wrong with this tax. If the people living there voted for it, that's on them. The problem is city council budgeting for a specified amount of revenue from this tax in the first place. When will stupid fucktard liberals get it?

Bag of Magic Wed, 06/13/2018 - 17:31 Permalink

I don't really drink that shit but if I did how far would I need to drive to beat that stupid tax? I know I will just move the fuck out of that shit hole !!

Sudden Debt Wed, 06/13/2018 - 17:33 Permalink

Tax water 

Tax the number of windows in a house

Tax pets

Tax people who have money

Tax white people because they're white

Tax sunlight

Tax air

 

There's plenty of idiotic things to try out in Loonsville!

BrownCoat Wed, 06/13/2018 - 17:40 Permalink

"flawed soda tax"  ??

Get real. So the politicians 'said' the tax would bring in more revenue than it does. Perfect! Now the politicians do not have to deliver on what they promised to spend the tax on. AND, they still get extra tax revenue

When will you tax slaves ever learn?  The game is fixed against ya.

ihatebarkingdogs Wed, 06/13/2018 - 17:46 Permalink

In California the "soda tax" is on the container it comes in. They call it "recycling fee", but it is a TAX. (The recycling fee is not a deposit, in that the .05 fee per can is not refunded at par when you recycle the can. You get maybe $2 for 100 cans).

I avoid the tax by not purchasing beverages in containers that incur the tax.

mvanzyl Wed, 06/13/2018 - 17:49 Permalink

Wait, so this tax wasnt to disincentivize unhealthy drinks?...the governmental spending vampires actually want fat people to buy more soda and have no concern for us...?!! *Shocked*