Students at Temple University in Philadelphia, or perhaps their parents, are getting a great lesson today on the real life economic consequences of liberal political policies run amok. Courtesy of Philly’s new 1.5 cent per ounce ‘soda tax’, Temple has been forced to hike it’s 2017-2018 boarding costs by $400,000, or roughly 4.8%. Per Philly.com, Temple’s CFO said they will roll back the planned $400,000 meal plan hike if the soda tax is repealed.
Board rates will rise an additional 4.8 percent for 2017-18 solely because of the 1.5-cent-per-ounce sweetened-beverage tax, which went into effect this year, the university said. The tax was enacted to help fund parks, recreation centers, and early childhood education. Heated debate over it continues, with PepsiCo having announced planned layoffs and retailers reporting steep losses.
The total impact of the new tax is estimated to be $400,000 per semester, said Ken Kaiser, Temple’s chief financial officer. The university will roll back the board increase if the tax is repealed, he said.
“This is another example of the damaging impact this tax is having on Philadelphia families,” said Anthony Campisi, a spokesman for Ax the Philly Bev Tax Coalition, made up of a number of Philadelphia businesses and residents, many of them involved in the soda industry. “It’s ironic that a tax the mayor sold on the basis of expanding educational access is now going to be making higher ed less affordable for students.”
Of course, Philadelphia’s Mayor, who has come under fairly constant attack for the controversial tax, said that Temple is simply using his legislation as a scapegoat to “pay for their ever-growing administrative salaries and new, expensive buildings and amenities.”
“The beverage tax is becoming a popular scapegoat for unpopular decisions,” said spokeswoman Lauren Hitt. “Universities across the country have been raising meal-plan fees because families are increasingly chafing at tuition increases, and universities still want to pay for their ever-growing administrative salaries and new, expensive buildings and amenities.”
“Temple’s own administration staff has grown by 40 percent in recent years; they are planning to build a multimillion-dollar stadium; their new 24-story dorm includes flat screen TVs; and, sure enough, they have a history of raising their meal-plan fees to cover those costs – by 2.5 percent in 2015 and 4.3 percent in 2014.”
As we pointed out a couple of weeks ago, when Philadelphia became the first US city to pass a soda tax last summer, city officials were eagerly looking forward to the surplus-tax funded windfall to plug gaping budget deficits (and, since this is Philadelphia, the occasional embezzlement scheme). Then, after the tax went into effect on January 1st we showed the tax applied in practice: a receipt for a 10 pack of flavored water carried a 51% beverage tax. And since PA has a sales tax of 6% and Philly already charges another 2%, the total sales tax was 8%. In other words, a purchase which until last year came to $6.47 had overnight become $9.75.
Then came the layoffs as soda sales slumped as much as 40% forcing Pepsi to lay off 80 to 100 workers at three distribution plants that serve Philly. And since Pepsi only employed 423 people in the city, it meant that as much as 20% of its employees were suddenly out of a job due to a disastrous ordnance that was meant to provide additional municipal funding and instead will now lead to an increase in unemployment, coupled with a general decline in consumption, not to mention tax revenues for the city of Philadelphia.
A spokesman for Pepsi said “The layoffs come in response to the beverage tax, which has cut sales by 40 percent in the city…Unfortunately, after careful consideration of the economic realities created by the recently enacted beverage tax, we have been forced to give notice that we intend to eliminate 80 to 100 positions, including frontline and supervisory roles.”
But not to worry, we’re sure Philly students can just take out more student loans to cover these increased costs…we certainly wouldn’t want them to have to divert any portion of their student loans that they’ve already set aside for Cancun.