Philadelphia's sugary beverage tax generated more than double the tax revenues projected in its first month, city officials announced Thursday.
Philadelphia so far has received $5.7 million in January collections from the tax, according to the city's revenue department. These figures, which were forecast at $2.3 million, will likely increase since not all payments received to date have been fully processed, according to revenue officials. The 1.5-cent-per-ounce tax impacts distributors of sweetened beverages as well as syrups and concentrates used to make sweetened beverages.
"The preliminary total of $5.7 million in revenues for the first month of the beverage tax is very good news," Marc Stier, director of the Pennsylvania Budget and Policy Center, said in a statement. "There is always a lag in revenues when taxes of this kind are instituted."
City officials have projected that the tax will bring in more than $91 million of revenue for a full fiscal year. The city anticipated slower revenue growth from the initial months of the tax due to the time it can take distributors to gear up for the change and inventory on hand as of the Jan. 1, 2017 effective date not being subject to the tax.
"That the first month's beverage tax revenues are so high is reason to believe the goal for the year will be met," said Stier.
The Revenue Department noted Thursday that it has launched a comprehensive monitoring campaign to ensure compliance with the tax. This initiative includes visits by revenue field investigators and auditors to dealer and distributor locations along with conducting traditional tax audits. The department is also expanding its compliance capacity with eight new hires focused on collections and enforcement.
"This monitoring protocol isn't about punishing businesses," Revenue Commissioner Frank Breslin said in a statement. "It's about helping make sure everyone is doing what they are required to do so everyone can avoid penalties and, ultimately, so we can fuel bigger and better things for the people of Philadelphia."
Philadelphia Mayor Jim Kenney has said money from the new tax will be used primarily for educational spending, including plans to expand pre-kindergarten programs. Revenue is also slated to be earmarked for debt service on $300 million in new borrowing to enhance parks, libraries and recreation centers.
