Philadelphia City Council voted 13-4 in favor of a tax on sugar-sweetened and diet beverages, more commonly known as “the soda tax” June 16. The tax, which is the first of its kind to be established in a major U.S. city, will place a 1.5 cent per ounce price increase on all beverages that qualify.
The tax was proposed as a way to both raise funds for pre-kindergarten programs in the city as well as a way to promote healthier lifestyles by discouraging the purchase of sugary drinks. The tax will come into play Jan. 1, 2017 and is projected to raise approximately $91 million annually. This money will go towards early education related initiatives such as the creation of libraries, community schools and recreation centers. Tax credits will be offered to retailers who choose to sell healthier beverages.
Philadelphia Mayor Jim Kenney, who advocated for the tax to be twice the amount that was approved, sees the passing of the initiative as an important step forward for the city.
“It’s been generations we’ve been going downhill with our kids in our neighborhoods. And it’s going to take some time to get us back. But this is the first step back,” Kenney told the Philadelphia Inquirer.
Former Mayor Michael Nutter also showed his support of the decision.
“Congrats to PHL City Council & Mayor Kenney on soda tax. It was the right thing for Phila when I proposed it 5+ yrs ago, & it’s right today! (sic)” Nutter tweeted June 16.
Drexel University student Mra Sue Gyaw voiced her hope that the tax would have an impact on the health of the city’s citizens.
“I really hope this works out. With the obesity and diabetes endemic here in the U.S., I think this is a step forward. I know it has certainly deterred me from drinking such beverages,” Gyaw explained in an interview.
“I think it’s a really good thing. You have a right as a citizen to make unhealthy choices but doing so burdens the healthcare system and therefore it’s only fair to pay for it,” sophomore biomedical engineering major Sean Van Duser commented in a digital correspondence.
The tax is intended to be imposed on distributors of qualifying beverages, so there will be no way of knowing how much the tax will increase sales prices until it goes into effect. It is possible that the consumer will not end up paying the full 1.5 cent per ounce extra for certain beverages, depending on how much their distributors choose to cover.
Drinks that are more than 50 percent fresh fruit, fresh vegetables or milk will be exempt from the tax. Beverages such as coffee for which the consumer would add sweetener separately will also not be subjected to the tax.
The tax has seen controversy since its initial proposal. Opponents argue that it will negatively affect employment in the beverage industry and that it will hurt low-income citizens more than it will hurt those in higher socioeconomic classes. Those in favor contend that the profits from the tax will serve to battle poverty since they will be used for establishing better educational opportunities for the most needy neighborhoods.
The anti-tax coalition of the beverage industry has no intention of giving up and has stated that they plan on expressing their opposition in court. This comes after a $5 million ad campaign by the American Beverage Association to try to prevent the tax from being passed in the first place.
However, Mayor Kenney shows no signs of backing down.
“We believe we’re on strong legal ground … they spent a long time twisting the facts of this whole debate on television with millions of dollars and that wasn’t effective. So we’ll fight the next fight when it comes,” Kenney explained to the Philadelphia Inquirer.
Whether or not the opponents of the tax will have any success in their campaign to overturn it will be seen in Jan. 2017, when the tax is slated to come into play. If the implementation occurs as planned, distributors of most energy drinks, sodas, bottled coffees, flavored waters and similar products will have to decide how much of the 1.5 cent per ounce tax will be passed down to consumers.