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March 5, 2010

Philly Proposes a Big Soda Tax

Music to my ears (via the Inquirer):

Mayor Nutter wants to treat the city's weight and wallet problems in his 2010-11 budget with the same remedy: the nation's highest tax on all sweetened beverages including soda, energy drinks, ice tea, even chocolate milk.

Nutter's plan would put Philadelphia at the front of the movement to tax sweet drinks, an effort that the beverage industry already opposes and that could encounter resistance in City Council.

The tax rate would be 2 cents per ounce, 40 cents on a 20-ounce bottle of soda. The levy would cover fountain-drink syrups and powders, based on the number of liquid ounces they produce. Diet drinks without added sugar and baby formula would be excluded.

City officials said they could raise $77 million a year. Health Commissioner Donald F. Schwarz estimated that a typical city resident drinks a half-liter of sweet beverages a day.

Not mentioned above, but confirmed is that the tax would also apply to flavored, sweetened milk. At 2 cents an ounce, it's about double the most commonly discussed tax and would add $1.34 to the price of a two-liter bottle of soda. If enacted, there's no question it will affect consumption.

Look, nobody likes taxes, but Philly already consumes above average amounts of soda and has high rates of obesity. Plus, for any arguments about regressivity of a soda tax (since it would theoretically hit low-income folks harder), it's important to remember that this is all about preserving services that help those low-income folks the most. I don't agree that a reduction in soda consumption because of price is on par with that same person losing access to vital city services -- we need to have some sense of perspective.

It will be very interesting to see if this tax can make it into law. Meanwhile, Democrats everywhere could learn something from Mayor Michael Nutter. Even if the City Council halves his tax to a penny per ounce, it's still going to be effective. Somehow, Dems seem to think that negotiating with oneself is the best strategy. Nuttter seems to be coming in high to make sure he gets something meaningful out of it. Anyway, stay tuned. The fight over this will no doubt be something to see.

Photo credit: poolie

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