Philly’s soda tax

Philly slaps $115,000 in soda tax compliance fines on businesses

Stores that buy from unregistered distributors are supposed to pay the tax themselves.

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In the three years since the city’s landmark soda tax went into effect, Philadelphia has fined more than 100 businesses for flouting the law. Their transgression? Buying soda from distributors who aren’t paying Mayor Jim Kenney’s signature levy.

Fines for purchasing and selling taxable beverages from an unregistered distributor are $1,000 for each offense. That’s added up to $115,000 in penalties to date, confirmed city spokesperson Mike Dunn, with 115 offending stores fined once each.

The 1.5-cent-per-ounce tax is levied at the distributor level. Those companies typically pass the cost onto the retailers, who then pass it onto the customer. Businesses slinging sugary drinks have two basic options: purchase from a soda tax-compliant distributor, or register with the city and pay the tax yourself.

Since before the tax went into effect, the Revenue Department has done continuous outreach to get beverage retailers up to speed on the regulations, Dunn said. That has included direct mail, paid advertising and in-person visits to stores.

Frank Breslin, the city’s revenue commissioner, said retailers are given multiple opportunities to provide invoices and show where drinks are being purchased before being hit with the $1,000 penalty.

Who’s getting fined? Dunn said state confidentiality laws bar the city from disclosing information about an individual taxpayer. (The exception is real estate taxes, which are all publicly available.)

Breslin acknowledged it’s mostly smaller outfits that have struggled with compliance. The Wawas and supermarket chains of the region have resources that make it easier to adapt than mom-and-pop stores.

The revenue director said no one neighborhood or type of business was being targeted more than another.

“In general, we’re doing enforcement citywide,” Breslin said.

Asked about potential language issues at the city’s bodegas, corner stores and small markets that sell soda, Breslin said the Revenue Department has “at least one” Spanish-speaking investigator.

Other investigators may call a translation service hotline to help navigate any barriers, Breslin said, adding that his department is actively seeking more investigators with second language skills.

Revenues from the tax help fund initiatives like universal pre-K, community schools and the Rebuild project to overhaul parks, playgrounds and rec centers. The beverage industry has spent millions lobbying against the tax, and continues to put pressure on City Council to find alternative ways to fund the initiatives.

Anthony Campisi, a spokesperson for opposition Philadelphians Against the Grocery Tax, a coalition of interests that oppose the levy, said the fines were another indication that “local business owners struggling to implement this complicated regulation.”

“It’s the city’s small, family-owned businesses and the Philadelphians who shop at neighborhood stores who have been hit hardest by this tax,” Campisi said. “As working families head outside the city to avoid this regressive tax, Philadelphia businesses are losing sales and customers.”

Businesses looking for a place to buy sugary drinks that does assess the levy can be found on the city’s searchable list of all tax-paying distributors.

Want some more? Explore other Philly’s soda tax stories.

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