Even before the ink was dry on Philadelphia’s new soda tax ordinance, other cities were looking to copy it.
Before they do, though, they might want to wait and see how things turn out in the first major American city to pass such a tax.
Already, the Philadelphia soda tax is a major victory for the pro-tax crowd. Over the past eight years, cities have made more than 40 attempts to pass soda taxes, according to the American Beverage Association. Nearly all of those efforts have ended in defeat, including two previous attempts to pass a soda tax in Philadelphia.
But last week’s vote by the Philadelphia City Council could change perceptions about what is politically possible elsewhere. Politicians and special interest groups in favor of higher taxes are already licking their chops at the idea.
In Baltimore, Health Commissioner Leana Wen issued a statement commending Philadelphia’s new tax.
“We hope that Baltimore will follow suit,” she said.
Former New York Mayor Michael Bloomberg, who once tried to ban big sodas in his hometown and financially backed a nonprofit that ran ads supporting the soda tax in Philadelphia, also sees the city as a launching site for other efforts.
“Philadelphia will almost certainly not be the last city to adopt a sugary drinks tax,” said Bloomberg in a statement. “In fact, the question now is not whether any city will follow suit, but rather how many — and how quickly?”
In November, residents in San Francisco and Oakland, California, will have a chance to vote on a similar tax on sugary beverages. Activists in Boulder, Colorado, are hoping to get a soda tax on the ballot in November, too.
Before Philadelphia, the only city in the nation with a specific tax on soda was the progressive bastion of Berkeley, California. What happens in Berkeley might influence what happens in places like San Francisco and Boulder, but getting the soda tax on the books in Philadelphia opens up a whole new set of possibilities for the pro-tax crowd.
Dr. Jim Krieger, executive director of Healthy Food America, which favors taxes on soda and other unhealthy foods, said his organization is already hearing from local officials who want to follow in Philly’s footsteps.
“It’s not ‘just Berkeley’ anymore,” he said.
Indeed not, though the circumstances that allowed the soda tax to become law in Philadelphia might be difficult — but not impossible — to recreate in other cities.
Melissa Bova, a spokeswoman for the Pennsylvania Restaurant and Lodging Association, which opposed the tax, chalked it up to a combination of a newly elected mayor (Jim Kenney won the post just last year) with a mandate and a good relationship with the city council.
Instead of focusing on the tax as a nanny-ish effort to nudge Philadelphians towards healthy choices — the way a previous administration tried, unsuccessfully, in 2010 to sell the idea of a soda tax — Kenney made a politically cunning move by openly admitting it was all about generating revenue for the city.
The tax will be applied to soda, yes, but also fruit drinks, sweetened iced tea and juices that contain less than 50 percent real fruit. The 1.5 cents-per-ounce tax would add about $1 to the price of a two-liter soda and more than $2 to the cost of a 12-pack of canned soda.
The soda tax is expected to generate about $90 million annually for the city’s coffers. About half of that money will be used to fund an expansion of pre-K programs, a promise that bought the support of the city’s teachers union.
Other promises about how to spend the money allowed Kenney to cobble together a coalition interested in the tax, even against the vocal opposition of the Philadelphia’s powerful Teamsters union.
“Much like the prior administration’s much-ballyhooed tax on cigarettes — which Philadelphia consumers evaded by simply crossing the city borders to buy their tobacco products elsewhere — the same thing will happen with sugary drinks,” warned Dan Grace, Secretary-Treasurer of the Teamsters Local 830.
Though they rarely see eye-to-eye, a coalition of conservative groups essentially agreed with the Teamsters on that point. As Watchdog has reported, small grocery stores worry the new tax will drive customers away, since crossing the city line and shopping in the suburbs will be cheaper, while small businesses in the city ponder how to apply the tax to soda fountains and will likely pass the higher costs onto consumers.
Any other city that pursues a soda tax will also have to deal with these strange political alliances.
The soda tax divided Democratic politicians in the dark blue city. Ed Rendell, a former Philadelphia mayor and former Pennsylvania governor, has expressed skepticism.
“While it’s true that sugary drinks are a health problem, but so are cheeseburgers,” Rendell told a local radio show in March. “So are donuts. Are we going to do a tax on sugary donuts at Dunkin’ Donuts and Krispy Kreme? Are we going to tax cheeseburgers at McDonald’s?”
U.S. Senator and Democratic presidential candidate Bernie Sanders opposes soda tax because he sees them as regressive taxes that fall most heavily on the poor. Hillary Clinton has supported the soda tax.
Before jumping on the bandwagon, other cities might also want to see what happens in Pennsylvania. Groups opposed to the Philadelphia soda tax have already promised to challenge it in court, and there’s the possibility the state legislature could preempt the tax by passing legislation to block such municipal-level levies.
Other cities should also wait to see whether Philadelphia gets the windfall it expects to reap from the new tax. Already, the city plans to divert about half the revenue away from pre-K programs, potentially leaving them without the necessary funds to cover the expected $60 million annual cost.
And revenue could drop further if soda consumption in the city declines — as it did in Berkeley after a 1-cent-per-ounce tax was applied.
But city officials are mostly just seeing dollar signs, and special interest groups are hoping that fiscal troubles will give policymakers another reason to consider higher taxes on sugary drinks.
Nancy Brown, CEO of the American Heart Association, which favors sugar taxes as a way to reduce obesity, said Philadelphia’s vote could help blaze a trail for others to follow.
“As governors and mayors struggle with budgets and the high costs of chronic diseases, we urge them to consider taxes on sugary drinks as an effective strategy to fund much-needed health programs throughout their communities.”
The age of the soda tax has begun.