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In the first month of its existence, Philadelphia’s sugar-sweetened beverage tax brought in at least $5.7 million, according to preliminary figures released this morning by the city’s revenue department.
The city stressed in a release that the collection — which hasn’t been fully processed and is likely to increase — comes in at more than double a projection of $2.3 million included in a quarterly city manager’s report dated last week. However, it is below the average of $7.6 million a month the tax would need to make in order to generate a yearly projection of $91 million.
Philadelphia’s 1.5-cent-per-ounce sugar-sweetened beverage tax was enacted last year and went into full effect Jan. 1. It’s the first tax of its kind in a major city in America, and the cash coming into the city via the tax on a sweeping list of beverages is to be used on a variety of projects, including city-subsidized pre-K, community schools and a massive “Rebuild” project to refurbish the city’s parks, libraries and community centers.
City spokesman Mike Dunn said earlier this week that the city expected to collect less in the first month of the tax as opposed to later on in the year as “dealers of sweetened beverages indicated that they would be stocking up in advance of the tax.”
He added that the city had budgeted for variations in monthly collections and expected a slow start while some distributors and vendors are still registering with the city in order to pay the tax. So far, 380 distributors have registered and the city has implemented a “monitoring campaign” to ensure compliance.
Some of the projects the tax was to fund have already been put on hold, a move the city blames on a lawsuit filed by the American Beverage Association and on behalf of local distributors. The city is delaying borrowing $300 million to support the “Rebuild” effort and it will not add an additional 1,000 pre-K seats in September, as previously planned, if the tax is still under appeal at that time. Because the city is delaying its Rebuild-related borrowing, that also means it will not receive a $95 million matching grant from the William Penn Foundation until the appeal is resolved.
Shanin Specter, an attorney representing the ABA, challenged that in an email this week and said the tax’s “illegal end run” around the state constitution and federal law “is producing catastrophic results.”
“The city could use other revenue sources for its project and bonding ambitions,” he said, “but instead offers fake news and bitter invective as excuses for the consequences of its illegal tax.”