Controller Butkovitz Finds Many Businesses Realizing Double-Digit Losses from Beverage Tax

For Immediate Release
Oct. 16, 2017

Contact:  Brian Dries
215-686-8869

Controller Butkovitz Finds Many Businesses Realizing Double-Digit Losses from Beverage Tax 
City Controller’s analysis details economic impact of the Philadelphia Beverage Tax survey 

PHILADELPHIA – City Controller Alan Butkovitz today released the results of the Philadelphia Beverage Tax survey that found more than 60 percent of businesses indicated a revenue loss as a direct result of the new tax.

Of the 650 businesses that reported a decline in year-to-year revenue, more than 400 attributed “most” or “all” of the decline to the implementation of the Beverage Tax.  The majority of these businesses reported revenue losses of more than 10 percent.

“The overwhelming majority of businesses that carry products subject to the Philadelphia Beverage Tax feel a significant impact as a result of the tax,” said Controller Butkovitz.  “The tax has had detrimental effects.”

The City Controller’s Office reached out to 1,600 businesses throughout the city in more than 50 commercial corridors.  This included grocery stores, convenience stores, restaurants and bars, and retail stores.  Almost half of the businesses participated in the survey, with a large portion reporting some level of revenue loss.

According to Controller Butkovitz, the areas with the most businesses reporting revenue losses included West Philadelphia along the Market Street and 52nd Street corridors (19139), Hunting Park in North Philadelphia (19140), and areas around Juniata and Frankford (19124).  Many businesses in these neighborhoods reported losses of more than 10 percent.

“Consequently, these zipcodes have neighborhoods with some of the highest poverty rates in the city,” said Controller Butkovitz.  “These businesses cannot afford a one percent loss in business – let alone more than 10 percent.

“These are also neighborhoods subject to food deserts in Philadelphia. If these stores cannot continue to operate, it will be even more difficult to buy affordable or good-quality fresh food.”

Grocery stores reported the most revenue losses followed by convenience stores and restaurants.  Forty percent of businesses indicated they would have to make significant changes to keep their doors open.

“The tax seems to be impacting behavior and orientation toward the future,” said Controller Butkovitz.  “Many business owners seem apprehensive about the viability of their enterprises in the near and medium term.

“The Beverage Tax has needlessly impacted specific businesses in our city.”

A small number of businesses indicated the Beverage Tax had no impact.  This included a Center City restaurant that indicated they haven’t realized any change and people order what they want, accepting the tax.
 
According to Controller Butkovitz, the city could have achieved the same revenue results and funded many of its promised programs by sustaining the Wage Tax at its current rate.

“This was an unnecessary bait and switch with taxes in order to pay for new programs,” said Controller Butkovitz.  “The minimal reduction in one tax took away revenues that could have paid to fill Pre-K seats, along with money to fund other projects.

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