Soda tax
The Philadelphia tax is on both caloric sweetened and diet beverages.

PHILADELPHIA — The Philadelphia City Council approved a 1.5c-per-oz tax on sodas and several other drinks at the bill’s second reading on June 16, joining Berkeley, Calif., as the only other U.S. city with a “soda” tax.

But unlike the sweetened beverage tax in Berkeley and those attempted in other cities in recent years, the Philadelphia tax is on both caloric sweetened and diet beverages. And, the stated intent of the tax is to raise revenue for the city, not to combat obesity, diabetes or other ailments often blamed on the consumption of too many “sugary drinks” or to educate children on the dangers of drinking too much soda.

The American Beverage Association said the tax, and soda taxes in general, was regressive and discriminatory.

Michelle Minton
Michelle Minton, Cooperative Enterprise Institute

“The poorest in our communities often bear the financial brunt of these regressive taxes, which are ineffective at combating obesity,” said Michelle Minton in a recent article for the Cooperative Enterprise Institute. “Soda taxes are a stealth tax against middle class and especially lower income people. Faced with a new tax on soda, some consumers may shift their calorie indulgences to other foods or drinks, some may cut back on other grocery purchases and others will just pay the tax to get their favorite soda.”

Bill No. 160176 states that the tax will include, “Any non-alcoholic beverage that lists as an ingredient: any form of caloric sugar-based sweetener, including, but not limited to sucrose, glucose or high-fructose corn syrup; or any form of artificial sugar substitute, including stevia, aspartame, sucralose, neotame, acesulfame potassium, saccharin and advantame.” Also, “Any non-alcoholic syrup or other concentrate that is intended to be used in the preparation of a beverage” that include the caloric and non-caloric ingredients listed above.

Beverages not to be taxed include baby formula, “medical food,” any product that is more than 50% milk, fresh fruit, vegetables or a combination of the latter two, and unsweetened drinks to which a purchaser may add or request the seller add sugar or syrups and concentrates that the customer combines to create a beverage.

Soda tax chart
The tax would add $2.16 to a 12-pack of 12-oz soda cans, $1.02 to a two-liter bottle of soda and 90c to a 10-pack of 6-oz juice boxes.

“Examples of sugar-sweetened beverages include, but are not limited to, soda; non-100%-fruit drinks; sports drinks; flavored water; energy drinks; pre-sweetened coffee or tea; and non-alcoholic beverages intended to be mixed into an alcoholic drink,” the bill states.

The tax will go into effect Jan. 1, 2017, and will be assessed on beverage distributors, not retailers, and thus does not require a public vote. It is expected to raise about $90 million annually. According to the Philadelphia mayor’s office, about 49% of the funds raised will go to pre-kindergarten education, about 50% to other city programs, schools and employee benefits and 1% to a “healthy beverages tax credit.”

Mayor Jim Kenney
Mayor Jim Kenney

“Universal” pre-kindergarten education was a campaign promise of Mayor Jim Kenney, who took office in January, according to The Philadelphia Inquirer.

The tax would add $2.16 to a 12-pack of 12-oz soda cans, $1.02 to a two-liter bottle of soda and 90c to a 10-pack of 6-oz juice boxes, according to the No Philly Grocery Tax web site of Philadelphians Against the Grocery Tax, a coalition of citizens, businesses and community groups that opposed the tax.

Philadelphia magazine said the American Beverage Association spent $4.9 million in anti-soda tax advertising since March, while the pro-tax group Philadelphians for a Fair Future spent $1.4 million. Former New York Mayor Michael Bloomberg, whose attempt at a soda tax in New York City a few years ago was overturned in the courts, and Texas billionaires John and Laura Arnold “poured cash into a pro-soda tax ad campaign,” The Philadelphia Inquirer said.

Two previous attempts to pass a soda tax in Philadelphia failed, according to the Chicago Tribune