Philadelphia is the first major United States city to pass a tax on sugar-sweetened and artificially-sweetened beverages. The Philadelphia City Council approved the controversial US$0.15 per ounce tax, which will go into effect on January 1, 2017, by a vote of 13-4.
The new tax is aimed at thousands of bottled and canned products, as well as fountain drinks, with either sugar or artificial sweetener added. According to the law, exceptions include baby formula and products that are more than 50 percent milk, fresh fruit, or vegetable juice. The tax will be levied on distributors, but could add up to US$0.18 to the cost of a 12-ounce can.
The city expects the tax to raise about $91 million dollars annually to support kindergarten expansion, community school creation, park improvement, and recreation center development. Philadelphia Mayor, Jim Kenney, said in a statement, “Thanks to the tireless advocacy of educators, parents, rec center volunteers and so many others, Philadelphia made a historic investment in our neighborhoods and in our education system today.”
The tax has engendered fierce debate over the past several months, with the beverage industry lobbying strongly against it. The American Beverage Association (ABA) released a statement after the law passed vowing to take legal action and arguing “that these taxes are discriminatory and highly unpopular—not only with Philadelphians, but with all Americans." The ABA has argued that the tax will disproportionately affect the poor and force the beverage industry to eliminate jobs.
Proponents of the tax, including Mayor Kenney, public health advocates, and former New York Mayor Michael Bloomberg, have been equally vocal, however, arguing that the tax will help lift Philadelphia residents out of poverty by investing in struggling neighborhoods. Although this was the primary argument used in favor of the law, public health advocates also promoted the profound impact the law could have on the health of Philadelphia residents. A Harvard study found that the tax would reduce the number of obese residents by 36,000 and cases of diabetes by 2,300, ultimately saving $200 million in health-care spending.
Currently, Berkeley, CA is the only other U.S. city with a comparable tax—and their population of only 112,000 means the tax affects far fewer than the 1.5 million Philadelphia residents impacted by the new law. New York and San Francisco have both failed to pass similar measures, but National Public Radio’s (NPR) Allison Aubrey notes that Philadelphia’s decision could establish a powerful precedent for future decisions.