One year later, Philly soda tax still controversial

Soda prices have gone up in Philadelphia. And so has the number of children attending pre-K.

While those are among the things that have changed in the first year of Philadelphia's tax on soda and other sweetened beverages, there has been one constant: The tax remains controversial, and advocates on both sides are working hard and spending money to support or fight it.

The 1.5 cents-an-ounce tax went into effect Jan. 1, 2017, and raised $72.3 million in its first 11 months. But is the tax successful? And is it here to stay? The answers to those questions depend on whom you ask.

City officials have defended the tax as a means of funding pre-K, community schools, and improvements to parks, libraries, and recreation centers. But the beverage industry has poured resources into opposing the tax through advertisements and legal challenges, and business owners say the tax has hurt them and led to layoffs.

Both sides are still waiting to hear whether the Pennsylvania Supreme Court will consider the legality of the tax. And because Philadelphia is the first major U.S. city to pass the tax, others are watching. Cook County, Illinois, which includes Chicago, passed and then repealed its own version of the tax last year. Seattle passed a tax that takes effect New Year's Day. Other cities, including Oakland, Calif., and Boulder, Colo., have also imposed taxes on soda.

Although the tax in Philadelphia is levied on beverage distribution, in many stores it has been passed on to consumers. Mayor Kenney's office said last week that the tax raised $5.9 million for beverages distributed in November. That amount falls short of the $7.7 million monthly average needed for the city to hit its $92 million projection of fiscal year 2018 revenue. The total amount raised in the first year will not be available until January, when the city collects taxes on beverages distributed in December.

"We're very pleased with the first year of the tax," Lauren Hitt, a spokeswoman for Mayor Kenney, said Friday, noting that the tax is paying for programs "that we wouldn't have otherwise been able to fund."

The tax has created free pre-K space for 2,000 Philadelphia children, and in November the city released a list of 60 parks, recreation centers, and libraries that will be the first to have upgrades under Kenney's $500 million Rebuild project. But it will not take out a construction bond while the beverage tax is in legal limbo.

Meanwhile, the Ax the Bev Tax Coalition, which is funded by the American Beverage Association, issued a news release Friday decrying the tax and calling for its repeal.

The release, marking the one-year anniversary of the tax, repeated claims from business owners that jobs have been lost due to the tax. Jeff Brown, who owns ShopRite and Fresh Grocer stores in the city, said four of his seven stores are no longer profitable, and claims that more than 200 jobs have been eliminated at his stores. Local bottlers have eliminated more than 150 jobs, the coalition said.

"The tax has driven a stake through the heart of an industry that provided hundreds of family-sustaining blue-collar jobs in manufacturing," Danny Grace, secretary-treasurer of Teamsters Local 830, said in the news release.

Economists and researchers – some financed by supporters or opponents of the tax – have also provided their own analyses of the tax and its impact.

But one thing is clear: The tax will continue into 2018, and so will the debate.