Initiatives & Advocacy
New Study Finds Philadelphia Beverage Tax Is Causing Economic Damage
January 9, 2018
A new study conducted by leading economic analysis firm Oxford Economics found that Philadelphia’s beverage tax has led to the loss of blue-collar jobs, reduced sales local at supermarkets and cost the city’s economy millions of dollars.
According to a story from Bloomberg News the study shows, “the city lost 1,192 jobs due to the tax and that bottlers’ sales fell 29 percent in the city.”
Additionally, beverage sales at Philadelphia supermarkets fell 24 percent and increased 14 percent outside city limits, according to the study.
The story went on to note that sales losses weren’t just limited to beverages. “Non-beverage grocery-store sales, meanwhile, declined 9 percent, according to the study, and beverage sales increased outside the city limits, showing shoppers are taking lengths to avoid the tax.”
The study found that job losses were most pronounced in the retail sector – which includes grocery stores and neighborhood businesses - where 70 percent of job losses were concentrated.
“Our research shows that Philadelphia’s beverage tax is having a specific negative economic impact on Philadelphia’s economy,” said Hamilton Galloway, Head of U.S. Consultancy for Oxford Economics. “Beyond the loss to bottlers and distributors, the effects are concentrated throughout Philadelphia’s grocery retailers, who have experienced sales declines as shoppers shift their buying habits outside of the city to nearby communities.”
The Oxford Economics study also showed a sizable uptick in the sale of powdered drink mixes, which were exempt from the beverage tax, indicating that shoppers are simply shifting their purchases to untaxed substitutes.
The study’s findings bolster reports from local Philadelphia retailers, who have been forced to reduce employee hours and cut jobs in the face of declining sales due to the beverage tax. They also corroborate earlier studies, including one by independent market research firm Catalina, which found that the sales of beverages plummeted in the city but rose in the surrounding areas.
Click here for the full study.