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 After a bitter, months-long battle, the city council voted 13-4 to
approve a 1.5 cent-per-ounce tax on sugary and diet drinks beginning
in January. The council already approved the plan in a preliminary
vote last week, and the outcome had not been expected to change.
The City of Brotherly Love became the biggest U.S. city to have such
a tax. Much smaller Berkeley, California, was the first.
Similar efforts, including several spearheaded by former New York
City Mayor Michael Bloomberg, were defeated after intense lobbying
from organizations like the American Beverage Association, which
opposes the Philadelphia move and represents Coca-Cola Co and
PepsiCo Inc.
Following Thursday's vote, the ABA said it would take legal action
to stop the tax.
The Philadelphia vote marked a major victory for health advocates
who say sugary drinks cause obesity and diabetes. But experts noted
those concerns were not the focus for Kenney and other backers of
the tax as they took on critics complaining that "nanny state"
public health measures intrude on residents' personal lives.
Instead, Kenney rewrote the soda-tax advocate's playbook. He played
up the benefits of the cash injection from the tax for the city's
depleted coffers. In the first year, the tax is projected to raise
$91 million, and he pledged to spend funds on public programs such
as universal pre-kindergarten.
"If you want to tax something and people know where the money's
going to go, then it's easier for them to get behind it," Kenney
said in an interview. He noted that focusing on revenue, rather than
health, was largely responsible for the measure's passage.
The strategic shift could lend momentum to movements in San
Francisco, neighboring Oakland, California, and Boulder, Colorado.
Residents of those cities will vote in November on similar taxes,
which could deal further blows to a U.S. soft drink industry already
hit by declining soda consumption.
U.S. soda consumption fell for the 11th straight year in 2015,
according to Euromonitor data.
AVOIDING THE BLOOMBERG TRAP
Bloomberg made public health a centerpiece of his tenure as New York
City mayor between 2002 and 2013. He moved to limit smoking in parks
and restaurants, ban transfats and require calorie counts posted in
some restaurants.
On soda, he pushed for a tax, then a ban on soda purchases with food
stamps, and finally a much-lampooned limit on the size of sugary
drinks. His efforts were ultimately rejected, with critics decrying
the moves toward a "nanny state."
The strategy worked in Britain, where a new soft drinks levy was
announced in March after officials emphasized the country's obesity
crisis, saying it cost the economy billions of pounds annually and
was a huge burden on the state-funded health system.
That approach never worked in Philadelphia. Michael Nutter, the
previous mayor, twice tried to pass a soda tax as a health
initiative and as a way to plug a budget shortfall. He was unable to
push it through the city council.
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"Twice before it was used in Philadelphia and it was not successful.
It was used in New York and it was not effective," said Kenney,
adding that while the health benefits of a tax are not "less
important," they are less tangible.
Kenney, who became mayor in January, had made a campaign pledge to
provide universal pre-kindergarten, and he kept that issue as his
focus. A spokeswoman said complex state laws on taxation made
enacting a citywide soda tax the best option to raise revenue for
that signature proposal.
Bloomberg personally contributed funding to support Philadelphia's
pro-tax campaigners.
FIZZING WESTWARD
Opponents of Philadelphia's soda tax argued that the measure will
disproportionately hurt the poor and prompt Philadelphians to travel
to nearby suburbs to buy soda.
A spokesman for No Philly Grocery Tax, a local ABA-funded group,
said it would sue the city to stop it from imposing the
"unconstitutional" tax, but was still analyzing all its legal
options. In a statement, it called the tax "regressive and
discriminatory."
Kenney said the city was prepared to defend the tax in any
litigation from the beverage industry.
"It's the precedent that they were so staunchly fighting, and that's
their problem now," Kenney said. "You're going to see the beginnings
of a kind of domino effect relative to this specific effort."
In Colorado, Boulder hopes to use soda tax revenue on health
programs, and San Francisco and Oakland officials would recommend
but not require funds raised to go toward obesity and diabetes
prevention.
When Berkeley passed its soda tax in 2014, industry groups dismissed
the measure as a fluke given the city's largely white population and
reputation as a hotbed for liberal measures.
But Philadelphia is the fifth-largest U.S. city, with 1.6 million
people. "No one can trivialize it as they can trivialize Berkeley,"
said Larry Tramutola, a California political strategist who worked
on the Berkeley campaign and is currently leading the San Francisco
and Oakland efforts.
(Additional reporting by Melissa Fares in New York; Editing by David
Gregorio and Dan Grebler)
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