Philadelphia: The Next City to Tax Soda?

Soda taxes may not be sweeping the nation, but they seem to be growing in popularity. Numerous cities have considered them; Berkeley, California now has a 1-cent per ounce tax on sweetened beverages, and Chicago imposes a gross receipts tax of 3% on sugar beverages sold at retail. Will Philadelphia be next?

Yes, if new Mayor Jim Kennedy gets his way. He proposed a 3-cent per ounce tax on sugar-sweetened beverages when addressing the Philadelphia City Council on March 3, 2016. Revenue generated by the tax—anticipated to reach $400 million over 5 years—would primarily fund early childhood education.

This isn’t the first time a soda tax has been considered in Philadelphia: former Mayor Michael Nutter tried and failed to impose one in 2011. And it won’t be easy to implement one this time around. The American Beverage Association has defeated proposed soda tax measures “in more than two dozen cities since 2009,” according to the Wall Street Journal, and it will surely work to defeat a Philadelphia soda tax. The industry has already threatened to shutter Pepsi and Coca-Cola operations in the city if the tax is approved. Concerns over the proposed tax and its potential impact on jobs have also been voiced by the Pennsylvania Restaurant and Lodging Association.

Soda taxes are always controversial. Proponents say that in addition to raising revenue, they can reduce soda consumption and therefore obesity, diabetes and numerous other health problems. Opponents say they unfairly target both the beverage industry and low-income people.

Yet they do exist. High taxes on junk food and sugary beverages have been instituted in the Navajo Nation, Mexico, and Vermont, where they sparked statewide confusion. Lawmakers in Illinois have considered a soda tax for years and are preparing to reconsider the issue again this term.

Good, bad, or indifferent, state and local changes in product taxability create headaches for the businesses that sell them. Learn how sales tax software (SaaS) can help.