What soda-tax showdown in Chicago area might mean for Philly

San Francisco Soda Warning
Cook County, Ill., lawmakers will consider repealing a tax on soda and other sweetened drinks that went into effect this year.

The nascent movement to impose taxes on sweetened drinks, which has encountered passionate opposition in the Philadelphia region and elsewhere, is about to undergo a major test in the Chicago area.

Just two months after it went into effect, Cook County commissioners on Tuesday will vote on whether to repeal the penny-an-ounce tax on soda — called “pop” in Chicago — and other sweetened drinks. The repeal appeared likely to succeed, after four lawmakers announced last week they had changed their minds about the tax.

While a similar vote by City Council to end the tax in Philadelphia is unlikely any time soon, the levy’s opponents and advocates will be watching the outcome closely.

Taxes on sweetened drinks are a new phenomenon for U.S. cities  — Philadelphia became the first major U.S. city to pass one. The battle over them has played out in advertising campaigns, lobbying efforts, and court challenges.

Millions have been spent on lobbying and advertising in Philadelphia alone, as both sides wait to hear whether the Pennsylvania Supreme Court will take up a challenge of the tax.

Locally, tax opponents are hopeful that a repeal in Illinois would serve as a red flag for officials here, in the handful of cities that approved similar taxes in the wake of Philadelphia’s vote last year, and in other cities that might consider it in the future.

“I think it’s really instructive,” Anthony Campisi, a spokesman for the Ax the Bev Tax coalition in Philadelphia, said of the Chicago vote. “I think it’s testament to both the damage the tax is causing and the real anger coming from county residents about this tax.”

City Hall sources say that no movement is afoot for a repeal vote. Instead, city officials say they are focused on the programs the tax is funding, including pre-K and community-school programs, and improvements for parks, libraries, and community centers.

“The fact is, many Philadelphians recognize that we chose a means to fund these programs that is less onerous than other taxes,” said Mike Dunn, a spokesman for Mayor Kenney. “And these Philadelphians are proud that City Council has remained steadfast in support of funding these vital programs despite months of the industry’s incessant repeal drumbeat.”

Philadelphia officials “routinely monitor” tax issues in other municipalities, Dunn said. But he said Kenney’s administration does not see the vote in Chicago as a harbinger. “The Cook County tax is very different, both in terms of the tax structure and the political landscape.”

Philadelphia’s tax, 1.5 cents per ounce, is higher than Cook County’s. The county adds the tax at the point of sale, or directly on consumers. Philadelphia taxes distributors, who have passed on price increases to consumers. The taxes also differ in what they pay for; in Illinois, the money goes to the general county fund and is not targeted to specific programs, as is Philadelphia’s.

Public health advocates also point to the health benefits of taxing soda. Former New York City Mayor Michael Bloomberg, who has poured millions into supporting the taxes in Philadelphia, Chicago, and elsewhere, pushes the taxes as a way to fight obesity.

Cook County’s commissioners barely approved the tax last fall, with its board president breaking a tie vote and one commissioner not voting. But after one commissioner told the Chicago Tribune he had changed his vote Thursday, others followed suit and made a repeal appear almost certain.

In Philadelphia, the tax passed by a 13-4 margin, but some Council members were swayed to vote yes after it became clear that the tax had enough votes to pass.

“We want certainly for our children to be able to go to preschool, and we feel bad for those who are paying taxes,” said Councilwoman Jannie L. Blackwell, who initially opposed the tax but switched sides in the final hours before the vote.

The beverage industry, which says taxing soda leads to job losses and hurts local businesses, successfully lobbied against the tax in Santa Fe, N.M., where voters rejected it in May. But in addition to Cook County, San Francisco; Seattle, Oakland, Calif.; and Boulder, Colo., have all followed Philadelphia’s lead.

While the beverage industry and elected officials battle over the tax, polls have offered mixed results for insight into voter opinions.

A poll commissioned by the beverage industry surveyed nearly 1,600 Philadelphia voters in September and found that 62 percent supported a repeal of the tax. Of those who supported the repeal, 44 percent said they felt strong support for a repeal.

Before the tax went into effect, a survey by the Pew Charitable Trusts found that 54 percent of Philadelphians supported the tax. And a national poll by Harvard University and Politico released last month found that 57 percent of Americans supported taxing soda and other sugary drinks to pay for preschool and children’s health programs.

Meanwhile, the tax continues to generate revenue. Philadelphia raised $6.6 million from August drink sales, the mayor’s office said last week.

That amount falls short of the $7.7 million average monthly revenue needed to meet yearly projections.

Blackwell said she still sees good and bad in Philadelphia’s tax, but, “I’m hoping that ultimately this stuff will work itself out.”