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Philadelphia Council Passes Sweet Drink Tax

Philadelphia First Major City in U.S. to Pass Sugary Drink Tax 2:07

The Philadelphia City Council approved a tax on sweet drinks Thursday, becoming the first major city in the country to pass such a levy and overcoming a multi-million dollar campaign by the beverage industry to oppose it.

The 1.5 cent-an-ounce tax affects both sugar-sweetened and artificially sweetened diet drinks. The council and Mayor Jim Kenney framed it as a way to raise revenue, but health advocates have pushed for years for soda taxes to help fight obesity, diabetes and heart disease.

Close-up of soda in disposable cup
Close-up of soda in disposable cup Jamie Grill / Getty Images/Tetra images RF

“We want to expand pre-K to 10,000 slots in the next four years, we want to create 25 community schools within our neighborhoods to that people can go to the schools and get the services they need for their kids, both medical , social, psychological and other types of job training and educational opportunities for adults,” Kenney told NBC News.

Berkeley, California is the only other city that has such a tax. But officials have been pushing for such measures for years, pointing out that sugary drinks help fuel the epidemics of obesity, diabetes and heart disease that affect more Americans every year.

Centers for Disease Control and Prevention director Dr. Tom Frieden advocated for such a tax when he was health commissioner for New York City, saying it could reduce sugar intake.

“Research shows effective taxes, such as the one in Philadelphia, could reduce adult consumption of sugary drinks by 15 percent, obesity by 1.5 percent and new cases of diabetes by 2.6 percent,” the American Heart Association said in a statement.

“Nationally, studies predict a tax of this nature has the potential to prevent 95,000 coronary heart events, 8,000 strokes and 26,000 premature deaths. It could also avoid more than $17 billion in total medical costs. This all assumes that people replace sugary drinks with water and other healthy drinks.”

Philadelphia To Tax Sugary Drinks 1:24

Michael Jacobson of the Center for Science in the Public Interest, which has also long advocated for such taxes, notes that soft drinks are already subject to sales taxes and notes that taxes on tobacco products have been shown to reduce smoking rates.

“Such drinks are the perfect candidate for a tax: Besides raising revenue for valuable programs, a tax of this size can nudge consumption downward and reduce the regressive toll of soda-related disease,” Jacobson said.

“Philadelphia really provides a roadmap for other cities and states to adopt similar measures.”

But Kenney noted that emphasizing the healthy angle of the tax did not work.

“All the times it was tried before for health reasons, we failed,” he said. “It failed in New York because of the health argument.” People resent the “nanny-state attitude," he said.

In Maryland, Baltimore’s moving in a slightly different direction. City Health Commissioner Dr. Leana Wen has been trying to persuade the council there to approve a measure requiring warnings about the dangers of added sugar to advertisements, restaurant menus, and at any point of sale in the city where they are sold.

"The bill that we support, that is in front of city council, is not about taxes. It incurs no cost to retailers or to beverage companies. It is simply a warning label to educate parents and youth about the risk of sodas," Wen told NBC News.

Philadelphia’s measure is expected to raise about $91 million a year for pre-kindergarten programs and community schools; improvements to parks, recreation centers and libraries; and a tax-credit program for businesses that sell healthful beverages.

Milk, baby formula and drinks that are more than 50 percent fresh fruit or vegetable juice are exempt from the tax, as are any drinks, such as coffee, the customers add their own sweeteners to.

“The final vote on Mayor Jim Kenney’s soda tax proposal is a huge win for the city’s children and parents, who will now benefit from expanded pre-K and parks,” Jacobson said.

“And it’s a historic defeat for Big Soda, which set more than $4 million on fire in an attempt to kill the proposal.”

The win infuriated the beverage industry, which has threatened to sue.

“It's going to raise the price of a 12 pack of soft drinks by $2. It'll double the price of a 2 liter. It's going to raise the price on juice boxes,” Susan Neely of the American Beverage Association told NBC News.

“It's a regressive tax because the people that can least afford to pay it will be the ones that are paying a higher proportion of it. It's a tax on grocery products that are in everyone's grocery cart.”

Kenney said he doesn’t buy the Beverage Association’s argument. “It’s kind of hypocritical, frankly," he said.

Wen agrees. "The beverage companies, they spend hundreds of millions of dollars every year on advertising," she said. "They spend hundreds of millions more on lobbying."

And the advertising is disproportionately aimed at minorities, Wen said. "We just want to level the playing field so that everyone has unbiased, evidence-based, scientific information," she said.

"We know that we have the truth on our side."

No health expert argues in favor of soft drinks as part of a healthy diet.

“Water's a good substitute. It's good for you, too,” Kenney said.