Fallout over Philadelphia's soda tax bubbles up

Philly sugar tax costing jobs

Last Updated Mar 7, 2017 11:37 AM EST

PHILADELPHIA -- It’s been just over two months since Philadelphia became the first major American city to impose a tax on sweetened drinks. It’s supposed to fund education, but the industry says it’s costing jobs.

At a Philadelphia-area Canada Dry distribution center, the fallout over the city’s so-called soda tax is starting to fizzle up. 

America's "first soda" faces closure after country's first soda tax

“We have had to lay off about 30 positions simply because the business is down as much as it is in the city of Philadelphia,” said Bob Brockway, the president.

Brockway claims his soda sales have fallen 45 percent since the tax was imposed. PepsiCo plans to lay off at least 80 workers.

Philadelphia’s 1.5 cent per ounce sugar distribution tax is one of the highest in the country. A typical 12-pack of 12 ounce cans before the tax costs $5.58. Now, it’s $7.74. 

A 20-ounce soda that was $1.88 is now up 30 cents, to $2.18. 

These price changes are based upon the full tax being passed down from the distributors to the consumers.  

Brockway says that if the tax goes away the jobs will come back. 

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It’s been just over two months since Philadelphia became the first major American city to impose a tax on sweetened drinks. It’s supposed to fund education, but the industry says it’s costing jobs. CBS Evening News

“Is it a political game?” CBS News asked. 

“We are certainly not using this as a game or a fear-mongering tactic. This is reality,” he said. 

But Philadelphia Mayor Jim Kenney says politics are at play.

Sugary drinks tax boosts Philadelphia preschools with new funding

“Talk about using your employees as pawns. I always thought they sunk to a low, but this is a new low for them,” he said.

Kenney says the city has taken in nearly $6 million from the tax to help pay for expanded pre-K programs and hire around 250 people. 

“Especially kids who are living in struggling neighborhoods -- they need this help, they need this kind of connection and we are not going to let them down,” Kenney said. 

Philadelphia is one of several cities to pass a sugar tax recently. Chicago will become the largest city to do so come July 1 and the beverage industry is warning of job losses there as well.