Residents of the City of Brotherly Love aren't loving the new beverage tax which has sent prices soaring on than 3,000 every day beverages like fruit drinks, almond milk, sports drinks, soft drinks and even low- and no-calorie options. A St. Joseph’s University professor is out with an opinion piece for the Philadelphia Inquirer explaining why consumers will ultimately pay the price for misguided food and beverage taxes.
“From an economic standpoint, the Philadelphia beverage tax is a lose-lose situation - for consumers and city grocery stores,” Dr. John L. Stanton, a professor of food marketing, wrote. “One month into the new law, the effect on both is greater than many anticipated.”
Stanton explains that grocers are unlikely to just spread the tax across other products because “The manufacturers of untaxed product would strenuously object to raising their prices because a product in another category has a price increase due to a tax.”
Stanton also says grocers and other retailers operate on thin margins so they cannot just simply absorb the tax. According to Stanton, “the profit margins are already extremely low in the supermarket business, and this could have a significant impact on the ability to stay in business”
In order to avoid these higher prices, many Philadelphians say they are doing their shopping outside the city.
So who ends up bearing the brunt of the tax? According to Stanton, “The consumers who can't afford to travel outside the city to buy their untaxed beverages and groceries.”
Among the many reasons these taxes are bad policy, one of the worst is that those who can least afford them end being the hardest hit. Stanton sums it up this way, “What seems like a small tax can have the potential for big consequences - none of them good.”