Roosevelt Institute | Cornell University

Philadelphia's Beverage Tax Causes Controversy

By Matthew AnticoliPublished February 24, 2017

This past January, Philadelphia became one of the first major cities in the US to pass a "soda tax," a move met with great hostility from the Philadelphia public. Where is this hostility coming from if the tax revenue is intended to support programs beneficial to the city?

The "unhealthy American" is one of the most prevalent stereotypes about US citizens and, in the city of Philadelphia, it holds true. In 2009, the CDC reported that 67.9% of adults in the city were overweight or obese, and in 2015 the group RTI International compiled obesity data into a map, highlighting how afflicted the city is. To combat this trend, the Philadelphia city council approved a "soda tax" on the distribution of sugary drinks in June of 2016. Fully implemented in this past January, the tax levies an additional 1.5 cents per ounce on a wide variety of sugary drinks with the hopes of discouraging their purchase and consumption. Immediately after its implementation, Philadelphia residents went "up in arms," frustrated that so many items experienced a hike in price. Revenue from the tax is meant to go towards a variety of programs, most notably universal Pre-K, but the potential benefits of such investments are secondary to the interests of Philadelphians at large. The American Beverage Association expressed its own frustrations, filing a lawsuit against the city and arguing that the tax is unconstitutional (a case that the Association ultimately lost.)

Although any new tax is sure to upset some subset, in this case some frustration is warranted. Certain aspects of the tax are unusual, like its naïve implementation as a distribution tax, as well as the sheer breadth of products covered by the tax. Not only does it apply to carbonated sodas, but also to items like Gatorade, V8 juice, Vitamin Water, and iced tea, a decision that probably confused and upset many Philadelphians. I describe the tax as naïve because Mayor Kenney's administration expects distributors to not pass the tax onto consumers, but that is exactly what distributors have done. Additionally, although I support Kenney and using this tax revenue for the benefit of the city, tethering that revenue to an expansive, long-term program like universal Pre-K seems odd, especially if the main goal of the tax is to eventually remove the need for the tax.

The Kenney administration has admirable goals, but its methodology is flawed. I argue that Kenney and the Philadelphia city council should take into account the sentiments of Philadelphia residents and review the details of this new tax. It should first be levied on specific goods which are culturally known to be harmful, so that the public can get on board. Start with soda and stick with soda, instead of expanding the tax to all sugary beverages. Policies aimed at discouraging certain behaviors should target those behaviors directly - cigarette taxes do not also affect nicotine gum or patches, for example. Narrowing the scope of the tax will soften Philadelphians' reception of the new tax. Additionally, the tax revenue should be directed towards city projects in general, since the nature of a discouraging tax is a temporary one. That's not to say that Philadelphia should not explore and implement a program like universal Pre-K, but such a long-lasting program should not be tethered to a temporary funding source. Tweaking the policy would make it more effective overall.

In summation, Philadelphia's new beverage tax has been poorly implemented and is in need of various improvements. The goals of the Kenney administration are laudable ones, and ones which align with the needs of Philadelphia in general. However, policy must adequately take into account the perspectives and sentiments of the affected public, otherwise it will simply be seen as an example of government overreach and be opposed.