Philadelphia's new soda tax bears watching

Thursday, February 23, 2017

Lawmakers wrangling with fiscal issues and public health might be keeping an eye on the Philadelphia situation.

That's especially true in the Obamacare era, with the government involved in health care to an unprecedented degree, but President Trump's election throws that into question as well.

The Philadelphia city council passed a 1.5-cents-per-ounce levy on sugar-sweetened and diet beverages on a 13-4 vote.

The tax covers everything bottled, canned or from a fountain with either sugar or artificial sweetener, with a few exceptions.

Officials targeted proceeds toward expanded prekindergarten programs, community schools, improved parks, recreation center and libraries, and offering a tax credit for businesses that sell healthy beverages.

It went into effect in January and has raised $5.7 million so far, far exceeding the $2.3 million expected.

The city projects it will raise about $91 million this year, but there's a downside -- isn't there always?

Some supermarkets and beverage distributors say they expect to lay off workers after beverage sales fell by 30 to 50 percent -- worse than the city predicted.

The same officials expect soda sales to rebound once customers get used to the higher prices, and they say the soft drink industry is only trying to prevent other cities from imposing a similar tax.

It's hard to compare Philadelphia's tax to other similar taxes since it includes artificial sweeteners, but sugary drink taxes haven't always worked out elsewhere.

Critics call such taxes "regressive" since they disproportionately affect poor people, and tend to punish bad food choices rather than rewarding good choices.

Denmark recalled its "fat tax" because it failed to improve overall health, but did increase costs of food, administration and tax evasion.

Any attempt to impose a sugary drink tax in Nebraska would meet with heavy opposition from the same groups, as well as the corn industry which provides high-fructose corn syrup.

Still, few potential sources of revenue are likely to be off the table as lawmakers cast about for fiscal solutions going forward.

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