Troubling truths of Philly beverage tax

Soda Tax Philadelphia
Albert Delarosa stocks shelves with Coca-Cola products at the IGA supermarket in Port Richmond.

WHEN MAYOR Kenney and City Council enacted the new beverage tax, they said it was the only way to pay for important programs that would benefit Philadelphia's working communities. But recent developments raise serious questions about whether this tax is necessary and whether the programs the mayor has been championing - including expanding pre-K and rebuilding aging recreation centers - will benefit the neighborhoods who need help the most.

Recent news that the city and School District are in for a windfall of nearly $120 million in annual recurring funding shows us the tax was never needed in the first place.

More than $50 million of that additional money, which is coming from a reassessment of the city's commercial real estate property, will go directly into the city's own coffers. If pre-K is the mayor's top priority why was this money - a secure and recurring source of revenue - not used to fund it?

After all, City Hall has found ways to pay for Center City projects with existing funds and without raising taxes. This includes the recent announcements of $30 million for an expansion of the Philadelphia Museum of Art and $90 million for a new cap to create a park on Interstate 95 in Center City.

These spending decisions send the message that there's always enough money for Center City, but other neglected neighborhoods must pay higher taxes for community improvements. They show that our elected officials continue to shortchange our neighborhoods and underfund our schools while finding money for projects that benefit wealthier communities.

That's why we have joined a coalition of neighborhood business organizations to oppose this tax, including: the Philadelphia Dominican Grocers Association, the Pennsylvania Dominican Merchants Association, the Greater Philadelphia Chinese Restaurant Association and the Arab American Small Business Council.

Meanwhile, the costs of Philly's beverage tax continue to rise.

The 1.5 cents per ounce tax is strangling the supermarkets and corner stores, neighborhood economic engines.

Many local businesses are seeing total sales plummet as much as 20 to 40 percent as families flee the tax and begin to do more of their shopping in nearby suburban communities.

As a result, neighborhood supermarkets and corner stores have been forced to cut employee hours. Some have had layoffs.

If something isn't done soon, many local businesses throughout the city may be forced to close - hurting the very neighborhoods Mayor Kenney claims to champion.

This tax is also hurting our city's immigrant communities, where operating a corner store is a pathway to the middle class.

Neighborhood businesses are willing to pay our fair share.

But as things stand now, the beverage tax is a form of double taxation. The same businesses being hurt by the new tax will be forced to pay more in property taxes next year because their buildings' assessments have also increased.

There are also important early signs that the city's new neighborhood initiatives are not benefiting the communities most in need.

The mayor touted expanded pre-K as a way of boosting local economies by providing city assistance to neighborhood providers. But as Council President Darrell Clarke noted in a recent budget hearing, few pre-K sites in the city's poorest neighborhoods have been chosen for funding. This doesn't just reduce access to children who need pre-K the most, it also diverts money that should be stimulating local economies.

In addition, City Council has highlighted important concerns about whether the city's Rebuild program, aimed at restoring aging neighborhood infrastructure, will be targeted at the facilities most in need and whether a diverse set of businesses will be hired to participate.

The administration's proposal to funnel much of the Rebuild money through nonprofits is especially troubling because it would allow the city to evade its own diverse hiring requirements for public sector projects.

For too long, the city has utilized a small group of construction, engineering and design firms, excluding many small, neighborhood businesses from being able to compete effectively for city work. The mayor's current approach may further cement these practices.

Mayor Kenney and City Council shouldn't wait for the legal challenge to the beverage tax to play out before taking action. We need a decisive change in approach and attitude to finally put Philadelphia neighborhoods first, and we need City Council to step up and ask tough questions about the administration's anti-neighborhood tax policies.

We need to realign our budget priorities so that our neighborhoods finally get the resources and support they deserve. And most important, we need to foster small business growth by getting rid of the beverage tax and finding money for increased neighborhood services within our existing budget.

Fernando Suarez is President of the Small Business Union, and Adam Xu is President of the Asian American Licensed Beverage Association.