Union Sources Warn Layoffs 'Imminent' Due To Philadelphia's Drink Tax
PHILADELPHIA (CBS) -- Some business owners are claiming Philadelphia's drink tax is costing people their jobs.
City leaders expect the tax has pulled in more than $2.3 million since it took effect in January. City spokesman Mike Dunn tells Eyewitness News the administration expected lower figures initially as some retailers said they stocked up in inventory pre-tax and as some drive out of the city to buy sugary drinks. Officials expect those people will eventually come back to buy sweetened drinks in the city, as they factor in the cost of gas and the inconvenience of leaving the city.
However, some businesses say the tax is costing them. ShopRite says it has to cut 6,000 employee-hours in the city and its soda sales in Philadelphia are down by half.
"It's a bad tax," says David Day, owner of Day's Beverages.
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About two months in and Philadelphia's 1.5-cent per ounce tax on sugary drinks isn't so sweet for some business owners and customers.
"I hate it," says soda drinker Vicki Landers.
Landers says she's an avid Diet Coke drinker, but she has refused to buy soda in the city limits since the tax's implementation on Jan. 1, instead getting it from New Jersey, where her mother lives.
"They're not drinking less soda. They're going across City Line Avenue," says Day.
Business owners like Day see the decline in sales firsthand.
"We're down about 30 percent in Philadelphia," explains Day. "They buy a three-liter in a ShopRite for $1.39. The tax is $1.53, but the mayor wants us to absorb it."
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Sources with Teamsters Local 830 say that layoffs are "imminent" and that some workers have seen their take-home pay drop by 50 to 75 percent because they're moving less product.
Restaurants are feeling the pinch, too. Josh Kim, owner of Spot Gourmet Burger, says sugary drink sales at his shop have gone down about 10 to 15 percent.
"If you read the legislation, it's bollocks," says Kim. "This is just another example of this city mismanaging its dollars."
However, Mayor Jim Kenney says the beverage industry, driven by greed, is misleading the public.
"It is fear mongering," says Kenney. "This is them trying to hold onto their wealth. We are asking for a little bit of that money to educate poor kids."
Kenney added, "These American Beverage Association guys making seven, eight figures a year are whining like little babies. I don't have any sympathy for them."
The administration says while much of the money will fund universal pre-K, some of it will be used for other items, such as improving parks and recreation.
The case on the legality of the sweetened beverage tax is currently under appeal in the Commonwealth Court. Arguments are expected to be heard the week of April 3.