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June 10 2016

Sour Note: Philadelphia Passes Soda Tax

Patrice L. Onwuka

Philadelphia is set to become the first major city to institute a tax on sodas and other sugary drinks.

This week, a city council committee approved a 1.5 cent-per-ounce surcharge on sweetened beverages. The sweeping proposal would increase the cost of drinks that include sports drinks, sweetened teas and other beverages that have added sugars as well as those that are artificially sweetened such as diet soda.

Philadelphia’s Mayor Jim Kenney originally proposed a 3-cent-per-ounce tax on sugary drinks, but his proposal didn’t include artificially sweetened drinks. As a “compromise,” the city council committee cut the size of the tax, but expanded the scope. They estimate that it would raise $91 million over the next year, which is slightly less than the $95 million Kenney’s proposal was estimated to raise.

The revenue raised is allegedly going to be used to fund education programs including expanding pre-kindergarten and to pad the general fund. ABC News reports:

"It will fund the largest investment in education and neighborhood programs in decades,” Lauren Hitt, a spokeswoman for Mayor Jim Kenney, said today. “Over the next five years, it would provide over $400 million to pre-k, community schools and improvements to parks, rec centers and libraries."

This is not the first effort for a major city to pass such a sin tax. New York City and Francisco also tried and failed to get their measures through. Perhaps that’s why Nanny State former NYC Mayor Michael Bloomberg intervened to spent thousands of dollars to support the push for this tax.

In addition, to win support among retailers, the bill gives merchants a $2,000 one-time tax credit if they sell healthy beverages which are defined as beverages that don’t contain sugar-based or artificial sweeteners. Drinks with sucrose and stevia are out. The credit may not be enough though. Merchants carry what their customers want so the extra healthy drinks may very well sit idly on store shelves.

There’s conflicting data on where public opinion falls. According to NPR, the American Beverage Association (ABA), a national beverage group with members such as Coca-Cola, Pepsi, and Dr. Pepper, finds that 58 percent or Philadelphia voters oppose the tax on sugar-sweetened beverages whereas a recent poll from Temple University found most Philadelphians support the measure. The Temple poll is a little suspect though as they ask whether one would support the tax to help pay for universal pre-K, park renovations and other things. Support may not have been as strong if the use of the funds was more nebulous.

The ABA opposes the tax and, according to NPR, they are joined by an unlikely ally: unions.

Teamsters in Philadelphia have also rallied against the measure. "The passage of this proposal will result in the swift departure of the Pepsi and Coca-Cola operations in the city, the loss of many family-sustaining jobs," writes Daniel Grace, secretary-treasurer of Local 830.

In an interview, Grace said the new proposal that the City Council is supporting is, in his view, even worse than the original tax proposed by the mayor, since it now includes diet soda. "It's much more detrimental to our industry," since consumers would have to pay a tax on all these drinks, Grace told us.

This measure is less about promoting health and more about controlling what Americans consume as well as raising tax revenue. Sadly, those who will be affected most are poor and low-income families who will now have another tax to contend with.

“This is going to hit consumers very hard,” Anthony Campisi, the spokesman for Philadelphians Against the Grocery Tax, told ABC News today. “This is a whole lot of money out of their pockets for more than a thousand items that they shop for at the grocery store. It hits lower-income people particularly because they can't drive out of the city to go shopping."

Healthy eating and education are noble goals, but sin taxes don’t get us there. There’s little to no evidence that such effort make us any healthier and there’s no guarantee that the revenue raised will go to its intended target. In addition, there’s no evidence that universal Pre-K does our kids good. So why is Philadelphia pushing for this again? Oh yes, the bottom line.

Independent Women's Forum is an educational 501(c)(3) dedicated to developing and advancing policies that aren’t just well intended, but actually enhance people’s freedom, choices, and opportunities. IWF is the sister organization of the Independent Women’s Voice.​
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