Washington — This reflects neither Newton’s third law of physics nor everyday rocket science, but basic Econ 101, which the economic illiterates on the Philadelphia City Council obviously slept through. It’s a lesson the economic illiterates in other cities, who may be thinking of similar taxes, should keep in mind.
The tax was meant to curb consumption of sugar, which (with other foods) contributes to obesity, diabetes and other health woes. But the actual if unspoken intent was that Philadelphians would continue guzzling sugary drinks, but at the higher prices that would increase tax revenues flowing to City Hall.
But the sharp decline in soda-pop sales in Philadelphia has not gone unnoticed by soft-drink bottlers, distributors and retailers, many of whom have laid off workers. Pepsi will lay off 100 workers at two Philadelphia bottling plants and at a third plant in nearby Wilmington. Many of the jobs have been well-paying union jobs. "Our worst fears have been realised," says Daniel Grace, an officer of Teamsters Local 830.
PepsiCo reported a 43% drop in sales since January 1 and announced plans to lay off up to 100 employees, Grace says. Canada Dry is laying off 25 workers owing to a sharp decline in sales and Coca-Cola is likely to follow. The Pennsylvania Merchants Association says major layoffs of grocery-store workers are inevitable. "We predicted this dire outcome from the outset," says Grace, whose union "pleaded" with the city council not to enact the tax. "I hope they can live with themselves after knowing that their actions led to the loss of so many family-sustaining jobs."
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