This brief summarizes the findings from Lahr, et. al (2020) on the total economic impact on the City of Philadelphia of the Philadelphia Beverage Tax (PBT) from a macroeconomic perspective. Previous studies have focused only on demand effects or changes in specific industries (a microeconomic perspective). Such studies have, for example, examined how consumers would react to, and how and which industries will directly suffer from, a rise in beverage prices, or how the child daycare industry is likely to thrive as a result of being subsidized. To analyze the full economic and fiscal impact of the PBT and the PHLpreK program it supports, researchers simulated the effect of 2019 (the year prior to the pandemic) beverage tax revenues on the 2016 (the year prior to the PBT’s implementation) economy of Philadelphia. They found the overall economic benefits to Philadelphia from PHLpreK is nearly identical to the costs incurred by the industries directly impacted by the PBT and workers in those industries. (author abstract)
The total economic impact of Philadelphia’s Beverage Tax
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