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.
— PHLCouncil (@PHLCouncil) June 16, 2016
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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