Philly's Soda Tax Is Working So Well that Pepsi Is Laying Off Workers

In its first month, the 1.5 cent tax on each ounce of soda raised double the money that the city had expected it to.

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Mar 8 2017, 8:44pm

Last year, Philadelphia became the first major city in the US to pass a "soda tax," a move that at the time was heralded by the city's mayor as a win for health and education and fiercely opposed by the beverage industry.

Now just a couple months into the tax taking effect, it turns out that it's working better than many imagined—so far, it's reduced sales of sugary drinks by as much as 50 percent and led Pepsi to let go of 80 to 100 of the 423 employees at its Philadelphia facilities.

The tax on both sugary and diet sodas weighs in at 1.5 cents per ounce, a rate that nearly doubles the cost of a two-liter or 12-pack from the store. Pepsi has said that in the first two months of the tax, its sales were down 40 percent in the city and up 10 to 15 percent outside of the city, where there is no tax. A local distributor of Canada Dry, Sunkist, Arizona Iced Tea, and other brands meanwhile told Bloomberg that business was down 45 percent since January 1, while another point of sale described the tax as "nothing less than devastating."

In a statement sent to MUNCHIES, a PepsiCo spokesperson wrote that, "Unfortunately, after careful consideration of the economic realities created by the recently enacted beverage tax, we have been forced to give notice that we intend to eliminate 80 to 100 positions, including frontline and supervisory roles, in Philadelphia over the next few months, beginning immediately."

PepsiCo said that it would bring the jobs back if the tax was repealed.

READ MORE: In Case You Missed It, a Bunch of Cities Passed Soda Taxes in November

Commenting on the layoff situation, one city official told the Associated Press that Pepsi is "literally holding hostage the jobs of hardworking people in their battle to overturn the tax," pointing out that Pepsi made billions in profit last year and saying that the company continues to spend hundreds of thousands of dollars on efforts to overturn the tax.

On the other side of the argument, the AP quoted an industry source saying that the tax most affects low-income people without the means to travel outside the city to purchase tax-free soda.

In its first month, the tax raised $5.7 million, which will go to funding universal pre-kindergarten education. The amount is twice as much as what the city expected, meaning people aren't shifting away from soda as quickly as the city imagined they would. However, the soda industry says it's enough to cause serious damage to business operations.

It's all a lot of soda drama, and it's a scene that could be repeated if another major city passes and implements a similar tax, as Mayor Michael Bloomberg nearly did in New York.

Enjoy those crazy cheap Super Big Gulps while you can, America—that could be a pricy beverage in the future.  

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