The Total Economic Impacts of Philadelphia’s Beverage Tax

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Policy Brief

News Release

Highlights

• Even without considering the health benefits to Philadelphia citizens, the Philadelphia Beverage Tax (PBT) is likely to have a net positive effect on city residents. 
• The total estimated economic impact of the PBT on Philadelphia’s overall economy is roughly neutral, with gains almost entirely offsetting costs, even without accounting for estimated increases in employment for parents of children enrolled in PHLpreK.
• When estimated increases in employment for parents of children enrolled in PHLpreK are included, PHLpreK clearly provides a net benefit to Philadelphia’s economy and fiscal balance despite the tax. 
• In a more conservative scenario, the report estimated a 0.2% growth in the workforce, netting more than 800 jobs, $28 million in labor income, and $50 million in private GDP. In a best-case scenario, it estimated a 0.5% growth in the workforce, which would net about 1,350 new jobs, $59.9 million in labor income, and $120 million in private GDP.
• This study is the first to examine the PBT’s full impact on Philadelphia’s overall economy (a macroeconomic perspective). Previous studies provided only partial (microeconomic) assessments of the PBT’s impacts, focusing, for example, only on the effects on beverage purchases or on changes in specific industries. 
• A macroeconomic model (specifically a computable general equilibrium model) for Philadelphia was specially constructed to estimate the direct and economic effects of the tax and PHLpreK for this study.