Philadelphia Passes Tax on Sugar-Sweetened Beverages

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Soda Tax

Philadelphia, PA—Philadelphia has become the first major U.S. city to approve a tax on sugar-sweetened beverages. With a vote of 13-4, the City Council passed the bill on June 16. One major selling point was that the estimated $91 million the tax could bring each year would significantly boost the funding of programs such as city-wide pre-K education. The tax could also prove to be a public health victory if it effectively curbs the purchasing of sugar rich beverages, such as sodas, that have been a contributing factor in obesity and diabetes.

So far, the tax is levied on distributors at 1.5 cents per ounce sold to dealers for the purpose of resale in Philadelphia, which may eventually affect the price of the products for the consumer. The bill defines sugar sweetened beverages as, “Any non-alcoholic beverage that lists as an ingredient: (.1) any form of caloric sugar-based sweetener, including, but not limited to, sucrose, glucose or high fructose corn syrup; or (.2) any form of artificial sugar substitute, including stevia, aspartame, sucralose, neotame, acesulfame potassium (Ace-K), saccharin, and advantame.”

Syrups or concentrates used in the preparation of a beverage (soda fountains) that contain the aforementioned ingredients are also included in this group. Exceptions include baby formula, products that are 50% by volume milk or fresh juice and/or vegetables, unsweetened drinks and syrups or concentrates customers use to personally sweeten or prepare a beverage. The bill, however, does not set any limits for how much sweetener can be in a beverage to be taxed.

The beverage industry has been waging a campaign against the bill, financing more than $4.2 million in media buys to turn public opinion against it. Now that the bill has passed, the industry is prepared to wage a legal battle. The American Beverage Association argues that the tax is illegal, violating Pennsylvania’s constitution that says taxes can’t target a single item. Philadelphia’s Mayor Jim Kenney is unperturbed and plans to sign the bill into law on Monday.