Philadelphia Becomes First Major City To Pass A Soda Tax

Tyler Durden's picture

While not quite as draconian as the soda ban which former NYC billionaire mayor Michael Bloomberg tried (and failed) to pass in New York in 2014, moments ago the the Philadelphia City Council approved a 1.5-cent-per-ounce tax on sugar-sweetened and diet beverages, the first such tax imposed in a major U.S. city. The reason? The Council is looking to raise about $91 million for an expansion of early childhood education. Instead, the money will most likely be siphoned off into various underground ventures (and bank accounts) or outright embezzled.

As a reminder, three years ago Michael Bloomberg pushed to ban oversize sodas in New York, a campaign which was ultimately rejected by the New York Court of appeals. The Philadelphia approach was less terminal, and ultimately promised revenues to the city, which is why it passed in a 13-4 vote this afternoon. The vote put to bed months of speculation and at-times tense negotiations, but also ensured the national spotlight will stay turned to Philadelphia for months, if not years, to come.

Philadelphia officials have been pushing for such measures for years,
pointing out that sugary drinks help fuel the epidemics of obesity,
diabetes and heart disease that affect more Americans every year. Yet oddly enough, any pretense that his tax is aimed the curbing the "dangers of sugar" or obesity dangers linked to soft drink evaporated when diet drinks were added to the mix.

The liberal bastion of Berkeley is the only other city that has such a tax, however Philly is the first major city to adopt a drink tax.

Critics - mostly the big soda companies - quickly vowed to fight it in court. And as Mayor Kenney rolls out the unprecedented levy  -and its economic and public health impacts come into view - experts, advocates and legislators will surely be watching closely.

"Thanks to the tireless advocacy of educators, parents, rec center volunteers and so many others, Philadelphia made a historic investment in our neighborhoods and in our education system today," Kenney said in a statement after the vote. "Today would not have been possible without everyone coming together in support of a fair future for every zipcode."

Kennedy added that "all the times it was tried before for health reasons, we failed," he said. "It failed in New York because of the health argument." People resent the "nanny-state attitude," he added.

Perhaps the people are right.

"We want to expand pre-K to 10,000 slots in the next four years, we want to create 25 community schools within our neighborhoods to that people can go to the schools and get the services they need for their kids, both medical , social, psychological and other types of job training and educational opportunities for adults," Kenney told NBC News.

Not so fast: the tax will hit thousands of products, essentially anything bottled, canned or from a fountain with either sugar or artificial sweetener added, save for a few exceptions. It is expected to raise about $91 million annually to be spent on expanding pre-kindergarten programs in the city; the creation of community schools; improvements to parks, recreation centers and libraries; and a tax-credit program for businesses that sell healthy beverages. What it will end up doing instead is rising prices to the point where the sales drop off more than offsets the now official tax.

The city plans to start collecting the tax Jan. 1.

As Philly.com reports, the levy is half the 3-cent rate Mayor Kenney initially sought, but that proposal never seemed to carry water with Council. In the end, the compromise deal, which added diet drinks to the mix, was supported by all but Council's three Republicans, David Oh, Brian O'Neil and Al Taubenberger, and Democrat Councilwoman Maria Quinones Sanchez. Council President Darrell Clarke, who fiercely opposed similar taxes when they were twice proposed by Mayor Michael Nutter, voted for the tax.

The tax will be levied on distributors. As Philly.com adds, "only time will tell how much will trickle down to consumers." Actually no: one can make a pretty safe guess: all of it, and when it does it will add up to 18 cents to the cost of a 12-ounce can, $1 to the cost of a 2-liter container, and $2.16 to the cost of a 12-pack. It will impact sodas, teas, sports drinks, flavored waters, bottled coffees and energy drinks, among other products.

Critics of the plan - ranging from bodega owners to the powerful American Beverage Association, which spent millions fighting it - have said it will disproportionately impact the poor and lead to the loss of beverage industry jobs. 

The win infuriated the beverage industry, which has threatened to sue. "It's going to raise the price of a 12 pack of soft drinks by $2. It'll double the price of a 2 liter. It's going to raise the price on juice boxes," Susan Neely of the American Beverage Association told NBC News.

"It's a regressive tax because the people that can least afford to pay it will be the ones that are paying a higher proportion of it. It's a tax on grocery products that are in everyone's grocery cart."

the beverage association said the tax was unconstitutional and said it would fight it in court.

Kenney said he doesn't buy the Beverage Association's argument. "It's kind of hypocritical, frankly," he said.

Advocates on both sides of the debate have saturated the city - and to a greater extent City Hall - with their pitches for months. But neither side favored a quiet close Thursday, as scores lined up to testify ahead of the vote. The day started with opposing events outside City Hall.

In the courtyard, the anti-tax coalition stacked dozens of products that will be taxed , along with signs showing the previous and new prices.

Nearby, on the building's northern sidewalk, advocates of the tax celebrated with a "soda fountain" - dropping Mentos by the handful into 2-liter bottles as a group of2 preschoolers erupted in laughter.

While the economic impact of the tax is still to be observed two things are certain: now that Philadelphia has passed it, other cities will follow suit, and one very importabt person will be most displeased.

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N0TaREALmerican's picture
N0TaREALmerican (not verified) Jun 16, 2016 5:02 PM

 

Burp....

Stuck on Zero's picture

This will be interesting. The Godless monsters who produce the sodas will sue the corrupt, sleazy politicians.  Bring out the popcorn and be prepared to pay for the legal fees one way or another.

johngaltfla's picture

I must respectfully challenge the headline and the story. There is nothing "Major" about that shithole known as Philadelphia.

cheka's picture

as long as no tax on purple drank, philly wont notice

RAT005's picture

I'm watching for net lower tax revenue. People will dodge the tax buying outside the jurisdiction and then the jurisdiction will loose the original sales tax revenue. 

$0.015/oz is very steep!! $0.005 would have probably been a problem. 

NoDebt's picture

I live near Philly (never in it, for reasons that should now be obvious).  I've followed this one pretty closely.  First off, it's not a "sugary drink" tax.  It's a "sweet tasting" drink tax since it also covers "diet" sodas, as briefly mentioned in the article.  If it's got any sweetener in it, basically, it falls under the tax.  So you decide for yourself if you think this is out of concern for people getting diabetes.  Whatever, moving on....

More to the point is that this was sold HARD as supporting early childhood education and pre-K programs.  Which it does.  Nearly half of the money goes to that.  

However, the rest is used to fund, basically, underfunded UNION PENSIONS and other government debts/programs.  Everything in Philly is underfunded.  It's the ultimate one-party town.  FAR outstripping Chicago, even in it's hayday.  And, of course, later they can simply change the rules and take ALL the money for pensions or other programs or whatever they want.  Ultimately, it is conjectured, they will do precisely that.  (Ultimately they will HAVE TO do precisely that because there is no other choice.)

UNION MEMBERS/WARD LEADERS were told the truth BEFORE things got rolling so they wouldn't be confused when the false campaign was subsequently rolled out talking about "health improvements" and "early childhood education" and all that bullshit that's not going to happen.  Union memebers sat there while everyone else was jumping up and down in excitement of the new programs that were going to be available to their kids, knowing that money was going straight in their pockets instead.

The next time a liberal/statist tells you all the stuff they're going to give you for your tax dollar remember this.  You will pay the tax, you will never get the promised service.  The ONLY acceptable size for government is the smallest possible and no more.

 

NoVa's picture

@ NoDebt -

I worked at a mortgage firm in Philly burbs 1999 to 2004.  Lived in Lower Bucks burb. 

Daughter now goes to Temple (yea - I'm trying to get her to carry a small firearm - she has cat ears and spray). 

But this tax dollar will never reach the intended targets. 

Same as it was always was - -

 

NoVa

 

espirit's picture

It's a value-added tax on water.

Greedy Fuckers.

NoDebt's picture

Yeah, you know, that's actually pretty much what it is.  Good observation, I think.

RafterManFMJ's picture

I read with great hilarity the Burning Platform stories about what a shithole Philly is - honestly when one goes up it's the highpoint of my day.

Watching Philly's antics really is entertaining, and I love watching them flounder. Hey, come to think about it, is Harrisburg still bankrupt?

johngaltfla's picture

Like I said, Philly is a shithole.

Ralph Spoilsport's picture

Coke and Pepsi should offer an unsweetened version just for Philly and send a big FU to the Mayor and his flunkies.

khakuda's picture

And include a free packet of sweetener with each can or provide restaurants with tons of free sugar when they buy unsweetened soda.  They would then be forced to tax all sugar.  Yes, fuck them.

khakuda's picture

Great points.  And we know the 1.5 cents is only a stop on the way to 5 cents and ounce, then 10.

The tobacco settlement the states did with the tobacco industry was much the template.  The money was sold as going to educate people as to the ills of smoking.  A small amount of money did, but the large majority went into the general fund.  Now, states just raise and raise the tax annually in the name of keeping people from smoking.  In reality, they are now partners with the tobacco companies with a large vested interest in seeing them succeed and seeing sales grow.  The perversity is that they are doing everything they can to stop the growth of electronic cigarettes (which any moron can tell you have to be safer because they don't involve breathing smoke) until they get the FDA to say they are the functional equivalent so they can tax them, too.

It's about the money and has NOTHING to do with public health.  Philly now has a vested interest in making sure people drink lots of soda to help the poor children.

Same reason soda pop banning politicians now want pot legalized.  Hard to argue that it is in the public's health interest, they just want to tax it.

By the way, Coke and Pepsi have been available globally long before the obesity crisis and, to your point, taxing artficial sweeteners makes their whole case transparent for the disingenuous farce it is.

Seriously, I hope Coke and Pepsi open a huge new store on the Philly waterfront on the Camden, NJ side.

NoDebt's picture

I wish I had written what you just wrote.  That's so dead-on right.

BandGap's picture

Contraband Coke and Pepsi, in from the suburbs, in 3...2....1

N0TaREALmerican's picture
N0TaREALmerican (not verified) BandGap Jun 16, 2016 5:07 PM

 

Really...  Not sure how big Philadelphia is, but you'd think most people will drive to the burbs to load-up on "pop". 

NoVa's picture

Inner city Philly has a lot of muzzies - remember about 4 to 6 months ago the muzzie in a white robe ran up to a cop and shot him cold blood?

 

RafterManFMJ's picture

If only the silly muzzie had sat outside the cop's car for three hours, then attacked. 

BandGap's picture

That is a pretty steep tax, $0.22 per 12 pack.

Wait till Chicago gets hold of this.

smithcreek's picture

check your math, $2.16 per 12 pack.

Big Corked Boots's picture

Used to be the only reason to go to Camden was the crack was cheaper. Starting Jan 1, the crack and pop will be cheaper. Waiting for the snap in all this...

BandGap's picture

If you live in/near Philly you always load up on booze and cigarettes in Delaware. This just makes one more item.

Tjeff1's picture

If the soda tax deters drinking soda.... 

Doesnt the income tax deter working??

erkme73's picture

Me too!  December will be 6  years since I drew a paycheck!  Was 37 when I quit.  It was either tax evasion, or quitting.   Fortunately, wife brings home the bling, so it was an option that not many have.

DaNuts's picture

Don't drink that shit, it makes you fat and rots your teeth. 

Falling Down's picture

You just know the economy is shit when this type of thing happens.

 

Son of Loki's picture

"It's all about the children's future."

 

~ Your Local Taxing Authority

Nobodys Home's picture

Child selling "loosies" dies during arrest!

Big Corked Boots's picture

Philadelphia is an amazing city. All in one place you can bear witness to the start of America, and the end of America.

NoDebt's picture

God DAMN that's a great line.  I'm totally stealing that.  You know, socialism and all.

Crush the cube's picture

Booze and smoke sales that off?

Billy Shears's picture

Fuck the children!!! Why a tax on diet-soda? These politicians are spoiling for a fight. If I lived in the cesspool otherwise known as Philadelphia I would refuse to buy a soda until the corporations squealed and then when they repealed the tax I would never drink another soda again. Fuck government!!!

khnum's picture

Fuck the children!

....yes that does seem to be the objective of current child education

Harry Paranockus's picture

Will someone please explain to me what the fuck diabetes and obesity problems are caused by sugar free sodas?

Nobodys Home's picture

I'm an RN and I can tell you nobody cares and nobody listens, at least 75% of diabetics that a nurse deals with. Probably because diabetics that do care and pay attention, don't need a nurse!

http://www.forbes.com/sites/fayeflam/2014/09/17/an-unintended-consequenc...

 

http://news.nationalgeographic.com/news/2014/09/140917-sweeteners-artifi...

 

Also...aspartame just sucks in general...Thanks Donald Rumsfeld!

http://rense.com/general33/legal.htm ...not a big Rense fan

but:  January 1981-- Donald Rumsfeld, CEO of Searle, states in a sales meeting that he is going to make a big push to get aspartame approved within the year. Rumsfeld says he will use his political pull in Washington, rather than scientific means, to make sure it gets approved.

 

Also: brominated vegetable oil...added as an emulsifier to citrus drink products...originally developed as a fire retardent, is really bad for you!

Sorry ...Don't do the Dew!

True Blue's picture

Welcome to Earth; Nobody leaves alive.

Ralph Spoilsport's picture

I used to have a Diet Coke habit and quit it for homemade ice tea a few years ago. When I want a soda as a treat, I keep some bottles of Mexican Coke in the fridge. Made with sugar, not Hi Frequency Corn Syrup. Tastes like the old days when the same size deposit bottle was a dime out of a vending machine.

silverer's picture

The government experts will explain everything.

Hmmmmm's picture

So... 100% unenforcable at the retail level. I see windfall profits for the small business in the future.

Richard Whitney's picture

This violates the state constitution in several ways. 

This will be taken to court and defeated.

The Mayor of Philadelphia is already demonstrating Chavez-like methods. He is awful.