Philadelphia Wage Tax Collections Show Continued Strength in Beverage-related Businesses

PHILADELPHIA-  The second quarter of 2017 showed continued strength in Philadelphia Wage Tax collections from businesses related to the distribution of beverages in the city, according to figures released today by the Department of Revenue.

In the second quarter of calendar year 2017, Wage Tax receipts from beverage-related industries were up by 4% compared with the second quarter of 2016 (from $23.2 million to $24.1 million).  This was part of a strong six months (January – June 2017) that showed Wage Tax collections from the beverage-related sector grew 5.8% compared to the same period last year.

In fact, the Wage Tax growth for beverage related industries outpaced the overall six-month growth for all industries (5.5%).  Accounting for ongoing Wage Tax rate reductions, the growth in actual wages and salaries paid to employees in these sectors was even higher.

“Repeated claims about job loss because of the Beverage Tax are not borne out by the Wage Tax collections in that sector,” said Revenue Commissioner Frank Breslin.  “The collections are not just steady, they are growing, and growing at a stronger pace than all sectors combined.  This is particularly heartening one week after two thousand children started or returned to pre-K programs funded by the Beverage Tax.”

Among the specific subsectors that showed growth in Wage Tax collections for the first two quarters of 2017 were supermarkets, convenience stores, full service restaurants, take out restaurants, bars and taverns, department stores and superstores, vending machine companies, and wholesale groceries.

Meantime, the economic benefits of pre-k were further substantiated by the Commonwealth’s Independent Fiscal Office (IFO).  In a new report, IFO says that spending on early childhood education created a tremendous ripple effect: more than a billion dollars in new economic activity.

The new study specifically looked at the economic impacts of spending on subsidized child care and no-cost pre-kindergarten programs in Pennsylvania.  It found that in FY 2015-16, state spending totaled $429.8 million for both child care subsidies (Child Care Works) and early childhood education (Pre-K Counts) for low-income families. The analysis concludes that total funding for both programs yielded $1.2 billion in economic activity in FY 2015-16.

“The IFO’s findings reflect what we’ve seen here in Philadelphia following the launch of PHLpreK,” said Chief Education Officer Otis Hackney. “Investing in free, quality early childhood education enables parents to go back to work, creates new teaching and support staff jobs in pre-K centers, generates work for contractors who build new classrooms, and produces a significant cost savings in special education. We are confident that Philly will see long-term economic benefits from investing in quality pre-K – and in the meantime we’re also feeling the immediate benefits. Early childhood education is a powerful and worthwhile investment.”

The IFO was created by the state Legislature to provide both revenue projections and analysis of fiscal, economic and budgetary issues to assist Commonwealth residents and the General Assembly in their evaluation of policy decisions.  The IFO’s full report can be found here.