Philadelphia Mayor Jim Kenney’s soda tax proposal has created a fierce war throughout the city and has even divided the 2016 Democratic presidential candidates.
In early March, Kenney, a former Fels Institute of Government instructor, introduced a plan to tax soda at 3 cents per ounce in order to fund universal preschool and other development projects that would cost $400 million over five years. The tax would apply to any beverage with added sugar, including sports drinks and sweetened teas. Diet drinks or those with sugar added at the customer’s request, such as coffees and teas, would not be taxed.
CNN reported that former Secretary of State Hillary Clinton came out in favor of Kenney’s plan at a forum hosted by the Mothers of the Movement, a gun control advocacy organization. She argued for replacing the “school to prison pipeline” with a “cradle to college” pipeline when Kenney’s soda tax proposal came up.
“It starts early with working with families, working with kids, building up community resources ... I’m very supportive of the mayor’s proposal to tax soda to get universal preschool for kids,” Clinton said. “I mean, we need universal preschool. And if that’s a way to do it, that’s how we should do it.”
Contrary to Clinton, Sen. Bernie Sanders (I-Vt.) opposes the soda tax because it would hurt lower and middle class residents and would perpetuate income inequality in the United States.
“Making sure that every family has high quality, affordable preschool and childcare is a vision that I strongly share,” Sanders said. “On the other hand, I do not support paying for this proposal through a regressive tax on soda and juice drinks that will significantly increase taxes on low-income and middle class Americans.”
Like the candidates, Philadelphia’s business leaders, academics and politicians are far from reaching a consensus on the proposal.
Supporters include education advocates, the Service Employees International Union, which represents about 10,000 workers in Philadelphia and the NAACP.
Wharton professor of business economics Robert Inman supports the proposal. He said in an interview that even though the tax is regressive, meaning it takes a larger percentage from low-income people than high-income people, the benefits outweigh the costs of its regressiveness.
“First off, the benefits for the kids and adults in the long run would be in the health gains from the reduced consumption of sugary drinks, which would help to reduce obesity,” Inman said. “The results of drinking less sugary drinks is that the country’s health care costs would also decline.”
According to the Trust for America’s Health, a nonprofit focused on promoting public health, it costs more than $60 billion annually just in Medicare and Medicaid expenses for obesity-related problems.
Karen Glanz, Penn professor of epidemiology and nursing, expressed concern about the details on how the soda tax is implemented because the retailers could undermine the tax on sugary drinks by increasing the price of other items while keeping the price of sugary drinks low.
“As a general principle, the tax is a good idea to try to reduce consumption of soda because it will work,” she said. “But when you get to the nitty gritty of it, it becomes more complicated of whether it will work.”
According to a study conducted by the University of North Carolina, Mexico’s federal tax on sugary drinks reduced soda purchases. In 2015, there was an average 6 percent decrease in soda sales.
The American Beverage Association recently entered the fight. The soda lobbying firm is spending at least $1.5 million to oppose his plan, which includes airing radio and television ads against the tax.
According to The Philadelphia Inquirer, City Council sources suggested that at least six of the 17 members were open to the tax.
Philadelphians Against the Grocery Tax, a new coalition representing over 500 businesses, has been formed to fight the soda tax proposal and supports Sanders for standing up for small family-owned businesses, working families and the poorest communities
“This tax will hurt small grocery stores like mine, which operate on thin margins and are community anchors,” Dany Vinas, owner of C-Town Supermarket in North Philadelphia and member of the coalition, said in a statement. “This tax will put my family-owned business at risk. We need support from the city, not another tax.”
However, Inman notes that linking the revenue to creating preschools is crucial.
“These preschool programs are absolute home run,” Inman said. “Even though the tax is regressive, the primary beneficiary will also be the lower-income kids. The money is going back to the kids. That I think is very beneficial.”
Michael Nutter, Kenney’s predecessor, and former New York City Mayor Michael Bloomberg have tried and failed to institute a soda tax. The only city that has successfully implemented a soda tax is Berkeley, California, which is only one cent per ounce.
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