US: Philadelphia Passes Sugar Drinks Tax

Philadelphia has become the biggest city in the US to levy a tax on sweetened drinks, after the city council approved a plan by Mayor Jim Kenney.

The move will see a tax of 1.5 cents per ounce being levied on regular sodas, diet sodas, sports drinks, energy drinks and other nonalcoholic beverages with added sweeteners. The tax will be levied on distributors, effective 1 January 2016.

The tax is half the amount initially proposed by Kenney, but is still estimated to generate $91m in additional revenue annually.  The city said it will use the extra money to fund community schools, whilst improving parks, recreation centres, and libraries.

The tax has been strongly opposed by the American Beverage Association, which has termed it “regressive” and claimed that it “unfairly singles out beverages”.  The ABA said it would take legal action to stop the tax, having already spent $4.2m to fight the current proposal.

In contrast, billionaire Michael Bloomberg said he will fund similar proposals in other cities across the country to help them “get the support they need to level the playing field with the soda industry.” Bloomberg, who implemented measures against the soda industry whilst Mayor of New York City, contributed heavily towards the Philadelphia campaign in favour of the tax.

NAM Implications:
  • All part of an attempt to improve consumer health, i.e. reduce the healthcare costs associated with consumer behaviour
  • In time all categories will be assessed on this criterion (health economics)
  • Essential that all stakeholders anticipate the impact on their categories, and act accordingly…