Sugar In The City Of Brotherly Love

Today, June 16, the city of brotherly love will take the proposed Philadelphia sugar tax to a final vote. The tax would place a 1.5 cent-per-ounce added tax on sweetened beverages. If the motion is approved, Philadelphia would be only the second city in the United States to impose such a tax in attempt to increase revenue and, thus, help fund the city’s educational programs and employee benefits.

It’s not the first attempt. The Philadelphia city government has tried on multiple occasions to pass this tax. Originally, the tax was touted as a deterrent for unhealthy eating habits. With the focus now shifting to generating revenue for improving schools and building community centers, there is a greater incentive for the city to get this tax passed.

A History Of The Sugar Tax

 

Having an added sugar might seem like a new trend, but this kind of tax dates all the way back to the 1930’s in Denmark (where it has since been repealed). Most recently, we have seen France and Mexico pass taxes on soft drinks; the United Kingdom should see its own sugar tax go into effect in 2018. The only city in the United States to have a tax on sugary soft drinks is Berkeley, California, which took effect in 2015.

Despite not having the longitudinal data one needs to make broad claims, recent trends do show that there is a decrease in sugary soft drinks in all of the aforementioned places. In terms of revenue, Berkeley has reported a $700,000 tax collection mid-way through the 2015 calendar year; revenue from the tax is on pace to surpass the projected yearly total.

Sweeter Than Cream Cheese?

 

The original proposed tax would have added three cents-per-ounce but has since been cut in half. In addition to the tax cut, the proposal expands the scope of taxable drinks to include those with artificial sweeteners. The city council believes that Philadelphia has the potential to raise an estimated $91 million in tax revenue as a result.

Proponents of the plan look to studies of public health departments, which show the connection linking sugary drinks to obesity and diabetes. They note that such taxes often deter people from buying sugary drinks, leading to healthier choices over all.

Opponents to the tax argue that companies such as Coca-Cola and Pepsi will be forced to pull out of the city, which will have a negative impact on employment. Others argue that a sugar tax might hurt small business owners, since larger chains would be able to offset pricing and push smaller shops out.

We can only speculate the outcome of the added tax to sugary drinks, but if Philadelphia passes the bill and it has positive effects, then expect the tax to make its way to other big U.S. cities.

What are your thoughts on the matter?

I am an Editorial Associate at TaxConnections providing you with tax news from around the world.

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