The Economic Impact of PHILADELPHIA’S BEVERAGE TAX
Starting in January 2017, the city of Philadelphia became only the second municipality in the US to impose a tax on sweetened beverages (SBs). Unusually for such taxes, the Philadelphia Beverage Tax (PBT) applies to all SBs, whether sweetened with caloric or noncaloric sweeteners. This reflects the origin of the PBT more as a revenue raiser than as a public health measure.
This study seeks to estimate the economic impact of the PBT on Philadelphia. To do this, we make use of two proprietary datasets. The first relates to wholesale sales of the three largest bottlers in the Philadelphia area—we estimate that together these account for roughly 73 percent of taxed Philadelphia beverage sales. The second relates to retail sales at supermarkets in and near Philadelphia. Both datasets cover the period from January to mid-April in 2017, along with the same period in 2016. These data substantiate several key points in the economics literature surrounding SB taxes, and allowed us to estimate the economic impacts of the PBT from reduced economic activity in bottling, distribution, and retail.