City Council appears poised to pass beverage tax
Philadelphia City Council appears poised this week to enact what could be groundbreaking legislation with national implications when it approves a 1.5-cents per ounce tax on thousands of beverages.
By a voice vote June 8, members approved the legislation after months of wrangling with opponents, including the beverage industry that spent millions of dollars fighting it.
The signature initiative of the Kenney Administration, it is expected to have the nine votes needed for passage at City Council’s weekly session Thursday.
The tax would be levied on distributors, who previously said all of the increases would be passed onto consumers. For example, a 12-ounce can of soda would be increased by 18 cents. A 2-liter bottle of soda would be an additional $1. The cost of a 12-pack of soda would increase $2.16.
Opponents believe these increases will hurt city businesses, especially small ones, who will experience lost sales or dramatically decreased profit margins.
Mayor Kenney had initially sought a 3-cents per ounce tax on sugar-sweetened beverages only. The new legislation would levy taxes on all sweetened beverages, sugar-based or diet, which includes bottled or fountain sodas, teas, sports drinks, flavored waters and energy drinks.
The Board of Directors of the Greater Northeast Philadelphia Chamber of Commerce voted May 10 to oppose that proposal, which Mr. Kenney believed would have netted the city $95 million per year.
The mayor estimates the new legislation will bring in $91 million annually. The city wants to fund expansion of pre-kindergarten and create community schools, improve city parks, recreation centers, libraries and police districts with the revenue.
Council members also heard—to the surprise and dismay of some–at their late-night session June 8 that $41 million of the money raised through 2020 will be deposited into the city’s fund balances, which dropped $80 million within the last year to $70 million.
Fund balances are the difference of what a city spends and what it collects. Rating agencies closely follow these numbers, which officials say is too low in Philadelphia.
If the legislation is passed this week, cities throughout the nation desperately looking for dollars like Philadelphia—or concerned over the impact sugary drinks have on health–may attempt something similar. Berkeley, CA is the only city with a tax (1-cent per ounce) on sweetened beverages.