City Announces Preliminary January Collections of
$5.7 Million for Philly Bev Tax
Collections more than doubled predictions for January
PHILADELPHIA- The Revenue Department announced today that the City of Philadelphia has received $5.7 million dollars in collections for the first month of the Philadelphia Beverage Tax, more than doubling the City’s predictions for January.
Revenue officials stressed that this is a preliminary figure and is likely to increase, because not all payments received to date have been fully processed. The preliminary total of $5.7 million is more than double the forecast included in the City’s Quarterly City Manager’s Report of $2.3 million.
“The preliminary total of $5.7 in revenues for the first month of the Beverage Tax is very good news,” said Marc Stier, Director of the Pennsylvania Budget and Policy Center. “There is always a lag in revenues when taxes of this kind are instituted. Reasons for this can include the time that distributors need to gear up for new tax, and the possibility that some of their inventory on-hand is not taxed. That the first month’s Beverage Tax revenues are so high is reason to believe the goal for the year will be met.”
The projection for a full fiscal year of the Philly Bev Tax is more than $91 million. The initial months’ collections of the PBT are expected to be lower than later months because inventory on hand as of the January 1, 2017 effective date was not subject to tax. As a result, many retailers stocked up in advance. Additionally, it is anticipated that some distributors and dealers may be slow to register, file and pay. This same pattern occurred in Berkeley, the only other U.S. city to implement a sweetened beverage tax to date.
The Revenue Department has launched a comprehensive monitoring campaign to ensure compliance with the tax. The effort includes visits by Revenue field investigators and auditors to dealer and distributor locations, to review invoices and customer lists to ensure compliance, as well as to conduct traditional tax audits. In addition to training all investigators and auditors already on staff to enforce the Philadelphia Beverage Tax, the Department is expanding its compliance capacity with eight new hires focused on collections and enforcement.
“This monitoring protocol isn’t about punishing businesses,” said Revenue Commissioner Frank Breslin. “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.”
At the same time, the City is continuing its outreach initiative to help elevate understanding of the Philly Bev Tax among businesses, to clarify the responsibilities of distributors and dealers, and to motivate registration as well as compliance. Between November 18, 2016 (the date registration for the Philly Bev Tax opened) and December 31, 2016 the outreach efforts achieved the following:
- The launch of a multi-lingual website offering audience-specific information and resources for distributors, dealers and consumers.
- Publication of a list of registered distributors on the Philly Bev Tax website.
- Street team outreach to more than 5,300 dealers throughout Philadelphia neighborhoods via teams going “door-to-door” and distributing dealer tool kits.
- Revenue Field Investigators visited more than 1,700 dealers throughout the City to provide guidance on compliance prior to the first month of activity and will continue visiting businesses across Philadelphia.
- More than 60 informational meetings for distributors and dealers have occurred including webinars, in person presentations and conference calls.
- Toolkit distribution to hundreds of beverage distributors. The kit included a summary of regulations, fact sheets, and sample bill stuffer to help communicate with their dealers/customers. For distributors who use e-billing, the City also provided examples of email language to communicate with their e-billing customers.
- Outreach to more than 30 relevant associations: this effort leveraged associations’ communications channels and ability to facilitate in-person meetings. This included small business associations, chambers of commerce, neighborhood business associations, economic development organizations, merchant associations, community development corporations, non-profit support organizations and tax/accounting associations.
“More than 380 registered distributors and dealers of sweetened beverages have registered,” said First Deputy Revenue Commissioner Marisa Waxman. “We will continue to give them the information and tools to comply, whether they be distributors who need to register or dealers looking for a registered distributor.”
The updated list of registered distributors is available at http://www.phillybevtax.com/Dealers/Registered-Distributors
Distributors and dealers not buying from registered distributors who did not register for the Philly Bev Tax before December 31, 2016 can still do so at PhillyBevTax.com. The City encourages immediate registration to avoid additional fines and fees.
Revenue from the tax will be used to make much needed investments in pre-K and community schools as well as in Philadelphia parks, rec centers, and libraries. Under the Five Year Plan, when the programs are fully implemented in two and a half years, 97 percent of the revenue will go toward the programs. The remaining 3 percent will support the Healthy Beverages Tax Credit and the cost of collecting the tax. More information on the programs at http://www.phillybevtax.com/Consumers/Where-The-Money-Goes.
The Philadelphia Beverage Tax is a 1.5-cents-per-ounce tax on the distribution of sweetened beverages as well as syrups and concentrates used to make sweetened beverages. Distributors were encouraged to register by December 31, 2016. The distribution of sweetened beverages in Philadelphia is subject to the tax, and filings related to sweetened beverages will be due monthly, on the 20th of the month for the prior month’s activity.