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5 things to know about the controversial soda tax

Council's troubled soda tax history, Kenney's ambitious plans, big beverage lobbyists, jobs, and the poor.

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Seeking additional funding for big projects, Mayor Jim Kenney will propose a soda tax Thursday at his administration’s first budget address. According to Philly Mag, which first broke the story, the sugar money will be used to support an array of costly projects.

Kenney told the Inquirer that the three cents per ounce tax on sugary beverages could bring in $400 million over five years. Some of that revenue would also go toward Council President Darrell Clarke's ambitious jobs plan, Kenney’s plan to rebuild the city’s parks and recreation centers, and their shared vision for universal pre-K. Plus, by the administration’s math, there would still be $26 million to put into the "quiet crisis" of the city's pension system — which, with a $5.7 billion deficit, needs all the love it can get.

As with past soda levies, there’s going to be staunch opposition this time around. Here’s what you need to know.

 

1. The soda tax has a troubled history in City Council.

Last year, Philly Mag’s Holly Otterbein wrote about the backroom assassination of the past soda taxes. Former Mayor Michael Nutter first proposed one in 2011. It was short-lived, for reasons we’ll get to in a moment. The idea floated around City Hall again before annual budget meetings in more recent years, but never came into fruition, despite a cash-strapped public school system and other underfunded city projects. Parking lot taxes, real estate taxes, use-and-occupancy taxes — you name it, but soda tax has been kept off the agenda.

 

2. Kenney was against the tax in the past.

As a councilman, Kenney was one of many critics of the soda tax. Interestingly enough, local bottling magnate Harold Honickman and the Teamster Locals, the union that transports the sugary goods, have contributed over $43,000 collectively to Kenney since 2007, including a hefty chunk of change in the mayoral election.

When AL DIA brought this up to Kenney during the primary last Spring, he said that the 2011 soda tax was a badly presented and poorly written piece of legislation. Fair enough, but his past criteria will likely be fodder for lobbyists this time around. Speaking of which...

 

3. Beverage lobbyists are gearing up for war.

The Teamsters union, the American Beverage Association, and (rumored) a grocers association will likely be dogging City Council members in the coming weeks.

When Mayor Michael Nutter tried and failed to win Council over a soda tax in 2011, the stakes were at two-cents-per-ounce tax. A member of the Nutter administration told the Inquirer that lobbyists were swarming City Hall, and that for every one tax advocate "there were two people paid by the beverage industry who were pulling City Council members out into the hallway and into their offices and working on them." At three-cents-per-ounce, you can expect even greater resistance.

 

4. Jobs are going to be a central issue.

One soda bottling plant is in the 7th District and another is in the far northeast. With a steep unemployment rate and an even steeper poverty rate, no politician wants to risk losing jobs in their district. (Councilwoman Maria Quiñones-Sánchez opposed the tax in the past.)

"Philadelphia's beverage companies have deep roots in the community and provide thousands of good-paying jobs in the city,” the Beverage Association said in a statement Tuesday. “We are committed to continuing to work with city leaders to support a strong community that is a great place to live and work for everyone.”

"The soda tax is an old idea that has been rejected in the past for good reason. Philadelphians have been burdened year after year with tax increases and a new tax on soda would just be another tax on hard-working Philadelphia residents and neighborhood businesses,” the statement continued.

 

5. Like all “vice taxes,” the soda tax will disproportionately affect the poor.

Nutter passed a two-dollar-a-pack cigarette tax in 2014. It was a band-aid measure to keep money flowing into the Philadelphia public schools. But even so, critics of the tax said that ultimately its burden falls on the poor. Low-income individuals smoke at higher rates, and the same goes for sugary beverages.

Taxes on products deemed harmful by society — i.e. cigarettes, soda, alcohol — are often called sin or vice taxes. They are contradictory in nature: on the one hand, they are meant to raise revenues; on the other, they are meant to deter usage.

After the cigarette tax went into effect, those with the means began driving to suburban counties to get their untaxed fix of Marlboro. Sure, the tax probably encouraged some to kick the habit. The legislation actually accounted for declining purchases over time. And what goes for Marlboro will go for Mountain Dew.

But either way, many small-business owners won't have the luxury of purchasing soda in bulk from out of the county, which is another angle you can expect the lobbyists to push in the coming weeks.

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