The Philadelphia City Council last week approved a 1.5-cents-per-ounce tax on sugar-sweetened and diet beverages by a 13-4 vote, making Philadelphia the first major U.S. city to enact such a tax. The city plans to start collecting the tax on Jan. 1, 2017.
According to the Pennsylvania Food Merchants Association (PFMA) and the National Association of Convenience Stores (NACS), the tax is not on retailers but distributors. Retailers are required to purchase from distributors specifically licensed to sell sugar-sweetened beverages.
The definition of beverage includes any sweetened beverage, including those with sweeteners typically found in diet beverages.
The tax rate is 1.5 cents per ounce for bottled beverages. The rate for syrup is 1.5 cents per ounce for the resulting beverage.
Beverages containing milk are excluded, but only if they contain 50 percent or more of milk-based ingredients.
Beverages containing 50 percent or more of fruits or vegetables are excluded.
A statement issued by the American Beverage Association (ABA) last week on the passage of the bill read: “The tax passed is a regressive tax that unfairly singles out beverages—including low- and no-calorie choices. But most importantly, it is against the law. So we will side with the majority of the people of Philadelphia who oppose this tax and take legal action to stop it. The fact remains that these taxes are discriminatory and highly unpopular—not only with Philadelphians, but with all Americans. Similar tax proposals have been rejected 43 times across the country in the past eight years, including twice in Philadelphia.”
According to the ABA, Philadelphia Mayor Jim Kenney justified the tax as a means to fund children’s education. “It was very much inside baseball, local politics,” said ABA spokeswoman Lauren Kane, adding that in Philadelphia, the “stars aligned” in a way that’s unlikely to be repeated in other municipalities.
