Soda tax dead? Not so fast...

While Mayor Nutter has all but waved the white flag on his proposed $300 annual trash fee, his administration is still fighting hard for his proposed two-cents-per-ounce tax on sugary drinks, which would raise an estimated $77 million a year once the program is fully implemented.

Under intense pressure from lobbyists, Teamsters, shopkeepers and bottling company employees, City Council seemed poised as recently as last week to sink the soda tax. But as the budget season wears on, some council members say the proposed tax is still a possibility, given the array of distasteful alternatives.

Sensing an opening, the Nutter administration is now pressing its argument with council. The city is circulating materials countering anti-soda-tax arguments that the new levy would cost jobs and touting the features of the anti-obesity initiatives the tax would fund. Some highlights:

The full text of the administration's spin can be seen below:

Sugar-sweetened beverage tax and job loss
Philadelphia Department of Public Health
3/30/10

Retailers
• If the cost of the tax is passed on to the price of sugar-sweetened beverages (SSBs),
consumption of SSBs may decrease. In and of itself, this could lead to decreased revenue for
retailers. However, we anticipate that people will choose to purchase other, non-sugar sweetened
beverages from these same stores. This substitution effect could make up for all
the losses due to decreased sales of SSBs. Most of industry's estimates of job loss do not
account for this substitution effect.
• Some people will continue to buy SSBs even if the price increases. Stores will continue to
gain revenue from these sales and consumers will bear the increased cost.
• If retailers instead choose to spread the costs of the tax across all their products, the price of
individual items, including SSBs, will not increase significantly.
• Accordingly, the tax may not change revenue for retailers, particularly for those that market
and sell non-sugar-sweetened beverages.
• Some Philadelphians may choose to buy SSBs outside of Philadelphia, but most are unlikely
to do so. Most sugar-sweetened beverages are purchased as a convenience item as people
travel to and from work/school or during breaks in the day. Among those people that do
make larger purchases (2-liter bottles, 12-can packs) in supermarkets or big-box stores, some
may choose to travel outside the City if the hassle and the travel cost are not too high and if
there is a store just across the border. Notably, these 'border' stores employee many
Philadelphians.

Bottlers/beverage transporters (truck drivers)
• If the cost of the tax is passed on to the price of sugar-sweetened beverages (SSBs),
consumption of SSBs may decrease. In and of itself, this could lead to decreased revenue for
bottlers and beverage transporters. However, most, if not all, bottlers also produce diet sodas
and many bottlers also produce water, juice, and diet flavored drinks. We anticipate that
people will choose to purchase non-sugar-sweetened beverages in place of the SSBs that they
give up. These will need to be bottled and transported.
• Some people will continue to buy SSBs even if the price increases. Consumers will bear the
increased cost. Bottlers will continue to gain revenue from these sales and beverage
transporters will still need to make their deliveries.
• If retailers instead choose to spread the costs of the tax across all their products, the price of
individual items, including SSBs, will not increase significantly. And any small change in
consumption will affect not only beverages but also other food items, blunting the effect on
bottlers and beverage transporters.

Obesity-prevention programs funded by Healthy Philadelphia sugar-sweetened beverage tax
Philadelphia Department of Public Health
3/30/10
As part of a comprehensive program for obesity prevention, the City proposes to implement a
Healthy Philadelphia tax on sugar-sweetened beverages (SSBs) in FY11. A two-cent per ounce tax
will be levied on retailers based on their annual sales volume of SSBs. This will generate an
estimated $77 million in annual revenue for the City, potentially lead to decreased consumption of
SSBs, and provide $20 million in annual funding (from FY12 onwards) for obesity prevention
activities.
These activities will include multi-faceted, evidence-based interventions to promote healthy eating
and physical activity. Some health economists and public health experts believe that dedicated
revenue for prevention programming is the most powerful way for such a tax to decrease rates of
overweight and obesity in the long run. Recently, the Department of Public Health—in conjunction
with other City agencies, non-profit organizations, and academic institutions—created a detailed
and innovative multi-year plan for combating obesity that will accomplish the following:
• Make healthy foods more available to Philadelphians by
o Increasing the value of food stamps when used to purchase healthy foods**
o Establishing affordable farmers' markets in low-income communities
o Expanding a network of corner stores that offer healthy foods and produce**
o Improving the quality of food in schools and after school settings.
• Decrease the availability and consumption of unhealthy foods by
o Enacting broad-based media campaigns**
o Instituting bans on junk foods in schools
o Providing nutrition education and enforcement of the menu labeling law.
• Promote physical activity in daily living by
o Expanding access to and use of City parks and recreation centers
o Enacting physical activity standards for after school programs
o Implementing a pedestrian and bike network throughout the city
o Incorporating active living considerations into neighborhood planning
The Healthy Bucks initiative will provide Food Stamp beneficiaries $2 extra for every $5 spent on
fresh fruits and vegetables, particularly in farmers' market settings. Such an approach has
significantly increased consumption of produce among thousands of low-income New Yorkers.i
Moreover, we plan to expand a Healthy Corner Store initiative so that over 1000 corner stores and
bodegas in the City are provided training, technical assistance, and mini-grants to implement a
sustainable business model for selling fresh-cut fruits and vegetables.

BUDGET
Staff (salary and fringe) $1.2 million
• Department of Public Health
• City Planning, Parks & Recreation, Office of Transportation & Utilities
Healthy Bucks $9.6 million
• $2 [for every $5 spent] x 4 [$20/mo/family] x 12 months x 100,000 families
Healthy Corner Store Initiative $5 million
• $5000/store [training, refrigeration, shelving/build-out] x 1000 stores
Media Campaign on healthy eating and activity $2 million
• Campaign development
• Media placement
• Message testing and evaluation
Other $2.2 million
• Establishing affordable farmers' markets in low-income communities
• Improving the quality of food in schools and after school settings
• Providing nutrition education and enforcement of the menu labeling law
• Expanding access to and use of City parks and recreation centers
• Enacting physical activity standards for after school programs
• Implementing a pedestrian and bike network throughout the city
• Incorporating active living considerations into neighborhood planning

Taxed items under sugar-sweetened beverage tax
Philadelphia Department of Public Health
3/30/10

Taxed
Regular soda: canned, bottled, fountain
Non-100% juice
Sports drinks with added sugar
Flavored water with added sugar
Energy drinks with added sugar
Bottled and canned tea and coffee drinks with added sugar
Flavored milk (chocolate, strawberry)
Slushee or slurpee

Not taxed
Diet soda
100% juice
Flavored drinks sweetened with nonsugar-based, non-caloric sweeteners such as: aspartame (Nutrasweet), sucralose (Splenda), and stevia (PureVia, rebiana).
Water
Unsweetened coffee and tea
Coffee drinks made with syrup
Diet bottled or canned tea drinks
Water ice