But instead of presenting the highly regressive levy as a “public health” measure aimed at discouraging poor people from drinking the beverages they prefer, which is how Nutter had framed it, Kenney said the city should use the tax to pay for “universal preschool”.
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The soft drink industry spent millions of dollars in a bid to head off the legislation. Unlike Berkeley, where voters approved a one-cent-per-ounce tax on sugar-sweetened drinks in 2014, Philadelphia will tax low-calorie and zero-calorie beverages at the same rate as regular soda.
The council hopes the tax will raise $91m in its first year and the money will be used to fund investment in community schools, parks and recreation centres among other projects.
Philadelphia City Council last night rubber-stamped the introduction of a tax on sugary drinks in the city but the American Beverage Association (ABA) immediately said it would take legal action to quash the new law.
The Philadelphia City Council passed a soda tax of 1.5 cents per ounce on Thursday, CNN Money reported.
“This is a generational problem”, Mr. Kenney said. The proposal was abandoned in 2011 after the beverage industry contributed $10 million to a local children’s hospital. He played up the benefits of the cash injection from the tax for the city’s depleted coffers.
Opponents say it will have a catastrophic effect on small businesses, forcing some to go under if their customers leave town to stock up elsewhere. The bill, however, does not set any limits for how much sweetener can be in a beverage to be taxed.
Philadelphia joined Berkely, both cities are taxing now the soda beverage.
The city estimates the sweetened-beverage tax will generate $91 million in annual revenue after being fully implemented and that it will collect $409.5 million over the next five fiscal years. They also claimed that it was unconstitutional and promised to fight the tax in courts. Those exceptions would include baby formula and products that are more than 50% milk, fruit or vegetable juice. And on the morning of the vote, anti-tax advocates stacked dozens of beverages with signs showing the previous and new prices in the City Hall courtyard, while nearby supporters celebrated with a “soda fountain” – dropping Mentos by the handful into 2-liter bottles as preschoolers erupted in laughter. Similar initiatives are also taking place in San Francisco and Albany, California.
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Ali Dibadj, an analyst at Sanford C. Bernstein & Co. who covers the soft-drink industry, said Philadelphia’s success stems from the fact that it didn’t position the legislation as a health measure.
