A sugary sweet soda tax

We’re reaching a fever pitch of intrigue surrounding a proposed Soda and Sweetened Beverages Tax, a creation courtesy of Mayor Jim Kenney’s administration, which hopes to collect $0.03 per ounce on sodas and sweet drinks in Philadelphia. Through the proposal, issued on March 1 and set for a late May or early June City Council vote, Kenney’s administration plans to earmark these funds for specific improvements: Pre-Kindergarten education, recreation centers, and libraries.

The debated tax has incited protests and millions of dollars in commercial campaigning from the Philadelphia Licensed Beverage Association, among others. The tax has received coverage in the New York Times and Wall Street Journal. And both Democratic presidential candidates have sounded off – Bernie Sanders is against it, Hillary Clinton supports it.

Did the administration imagine it would be making national headlines with this effort?

“Yeah, we definitely did. They’re a multi-billion dollar company, and we’re passing a tax that would set a precedent for the industry,” Lauren Hitt, the mayor’s spokesperson, said referring to the giants at the top of this chain, Coca-Cola and Pepsi.

The very idea that this tax is a “Grocery Tax” is a tactic that seems powerfully successful.

“We have never referred to it as a grocery tax, it’s a nickname that the Grocery Tax Coalition is using as a scare tactic,” Hitt added. “The Grocery Tax Coalition has worked really hard to reinforce that conception.”

The message from City Hall says that the tax is on the industry and the distributor, not on the consumer.

But that’s been a hard sell.

At the Philadelphia Crosstown Coalition’s Sugar/Soda Tax Debate Monday night at the United Way on the Ben Franklin Parkway, with seven of the 20 association constituents based in South Philly, former Republican mayoral candidate Sam Katz moderated two speakers: Donna Cooper spoke in favor while South of South Neighborhood Association chairperson and Philadelphia Beverage Association attorney Lauren Vidas spoke against the tax.

The latter opened by saying that “the Sugar Sweetened Beverage Tax, while the intentions are good, is not the way to go.” Cooper’s opening was more verbose. The former Ed Rendell Deputy Mayor of Policy and Planning and current executive director of Public Citizens for Children + Youth (PCCY) said “70% of students start school without the benefits of Pre-K. We’re here because we think Pre-K is the great equalizer.” She went on to say that most of Philly’s rec centers were built before most people in the room were born, that “Big Soda” (as Kenney called it in a press conference) sees revenues larger than the gross domestic product of some countries, and that they’re “profiting from the poor.”

Lower-income and minority Philadelphians have been referred to a great deal in the debate: that they’re targeted by the soda industry; that they’re the most affected by tax; that they’re less empowered to avoid the tax, like middle- and upper-income Philadelphians are. Health benefits seem to be touted as a side-effect of the tax from the administration, not the sole purpose – but many locals are keenly aware of the dangers of obesity and diabetes, especially in lower-income and minority neighborhoods.

Philadelphians for a Fair Future organized a news conference at Puentes de Salud, 1700 South St., Monday that saw Philly’s Health Commissioner, Tom Farley, pulling 58 linked sugar packets out of a 64-ounce soda cup. Many alarming facts were shared as support of the Sugar Tax: Diabetes now affects 15 percent of Philadelphians, nearly one in five African Americans; Americans living below the poverty line are twice as likely to have diabetes as those with double their income; and, according to the 2015 Southeastern Pennsylvania Household Health Survey, 24 percent of adults living in the 19146 zip code have been diagnosed with diabetes.

Mayor Kenney drinks Diet Pepsi, says Hitt, and a lot of it. She argues that, “last May, voters were given the option to vote for whether the city should form a commission on Universal Pre-K and more people have voted for that than any other ballot initiative in nine years,” she said, adding with a chuckle that “it beat all the mayoral candidates” except Kenney – “he edged it out by a few votes.”

“We need a way to fund these things that people have said loudly and strongly that they want,” Hitt explained. Kenney’s spokesperson says this is “a tax that people can opt out of, one of the fairest options we could come up with.”

Vidas argued on Monday night that Philadelphians would, in fact, not be able to avoid it and suggested that the Mayor hopes to fund his well-intentioned “legacy tax” on low-income grocery bills. The phrase “this is a tax that won’t be paid for by Philadelphians – that is false,” she said. “Small mom-and-pop restaurants, bodegas, these are the folks that are going to be paying the tax. If we care about these issues, we need to find a stable, long-term source of revenue. There are a lot of uncertainties about this tax.”

Harold Honickman, a Rittenhouse resident who’s earned upwards of $850 million in the local soda bottling industry and was ranked 277 on a Forbes list of wealthiest 400 Americans, has ushered in a soda lobby spending spree to prevent the tax to the tune of $1.7 million. He, like Vidas, points to the tax collection problems that trouble Philadelphia.

“The tax is great politics and bad execution,” Vidas said. “When you’re not collecting what you’re already owed by initiating a new tax? That’s bad policy.”

(Quiet asides immediately after the debate saw whispers of bonds the City’s keeping afloat and that this money would just get injected into a general fund.)

Cooper said “I remember when the liquor-by-the-drink tax was passed, and this feels like deja-vu – the same voices against it are the same voices now.”

So-called “vice” taxes, on cigarettes and liquor, have met mixed results in the past, but Cooper said both have been a boon for local budget inflows. Similarly, a $0.01 per ounce tax passed in Berkley, CA and a nationwide tax in Mexico have been cited as potential measures of success.

“Mexico saw its obesity level drop by 12 percent,” she argued. “The Cigarette Tax was an increase of $2 per pack, and the School District estimated about $50 million would come from that. The Liquor Tax hit its mark and has grown every year since. The world’s going to be different!” she fake-argued. “Thousands would be unemployed and there would be lawsuits!” she said was the initial reaction to both of those proposed, relatively successful taxes.

But that wasn’t what happened.

Vidas hinted that so-called “Big Soda” would litigate this tax and that “if you’re going to do a vice tax, you have to do it on a large scale so you can’t go to the next town or county over.”

Contact Staff Writer Bill Chenevert at bchenevert@southphillyreview.com or ext. 117.

Staff Photo by Bill Chenevert

Photo by Bill Chenevert

PCCY executive director Donna Cooper debated South Philly attorney Lauren Vidas, on Monday night over the merits of Mayor Jim Kenney’s proposed soda and sweetened beverage tax.