In 2016 Philadelphia became the first big U.S. city to pass a tax on soda. As Mayor Jim Kenney’s signature legislation, the levy funds pre-K, community schools, and improvements to parks, recreation centers, and libraries.
Since taking effect in January 2017, the 1.5-cents-per-ounce tax has remained controversial. Here’s the tax’s history:
February 2016: The proposal
Kenney, weeks into his first term as mayor, proposes a 3-cent-per-ounce tax on soda. He says it could raise millions for pre-K, jobs, and development projects.
The tax faces an uphill battle; Kenney’s predecessor Michael Nutter twice proposed a soda tax but was unsuccessful.
March 2016: Opposition surfaces
As Kenney unveils his proposed budget, lobbyists for the beverage begin to fight the soda tax proposal.
At budget hearings, City Council members ask questions about possible revisions, including a lower rate than the mayor proposed.
The mayor holds a “courtesy meeting” with local soda executive Harold A. Honickman, representatives from Coca-Cola Co., and an executive from the American Beverage Association. Honickman, a local philanthropist, tells The Inquirer about the Kenney administration’s proposal, “they have no idea what they’re talking about.”
April-May 2016: The debate
City Council studies the tax proposal and explores different potential rates for the tax.
Opposition and support rolls in from various groups. It’s mentioned as Democratic presidential candidates Bernie Sanders and Hillary Clinton campaign in Pennsylvania; Sanders calls the tax regressive; Clinton supports it. Former New York City Mayor Michael Bloomberg’s nonprofit gets involved, giving money to support a campaign in favor of the tax. The beverage industry also pours money into its opposition fight, and some Council members begin taking sides.
Council President Darrell L. Clarke calls Kenney’s proposal “ridiculous" and says it won’t pass.
June 16, 2016: The vote
With a looming budget deadline, City Council and the mayor weigh alternatives to the 3-cent-per-ounce levy.
They reach an agreement on a 1.5-cent-per-ounce tax on soda and other sweetened beverages, including diet drinks, sports, drinks, and juices.
City Council votes 13-4 to approve the tax, making Philadelphia the first major U.S. city to tax soda. Opponents immediately vowed to fight the tax in court.
October 2016: Pre-K enrollment opens
The city announces pre-K providers and opens enrollment for seats funded by the beverage tax.
Dec. 19, 2016: Court challenge
A Court of Common Pleas judge dismissed a lawsuit challenging the tax, paving the way for the tax to take effect on the first day of 2017.
January 2017: Tax begins
As the tax, which is levied on beverage distribution in Philadelphia, takes effect, customers find that stores have raised prices.
The mayor and City Council begin debating how to proceed with the $500 million Rebuild program, funded by the tax and intended to improve the city’s parks, recreation centers, and libraries.
February-April 2017: Businesses complain about impact
Beverage companies complain that they are losing money to the tax.
June 2017: Revenue revisions, court decisions
The city says the tax is expected to bring in less revenue than initially anticipated by the end of fiscal year 2017. Officials had projected raising $7.7 million per month, but the tax failed to hit that number in any of the first few months.
The city also gets a legal victory: The Commonwealth Court upholds the levy. Opponents say they will appeal to the state Supreme Court.
Kenney and city council reach an agreement for the Rebuild project with a plan that calls for greater diversity in the building trades, which will do the work on the parks, recreation centers, and libraries.
July 2017: Chicago gets its own tax
Cook County, Ill., becomes the largest jurisdiction in the country to pass its own tax on soda. But that tax does not last long; the county repeals it in October in a victory for the beverage industry.
August - December 2017: Studies released
Various studies about the tax are released. Their findings appear to depend, in part, on how they are funded; the beverage industry sponsored studies that found the tax hurts grocery sales, while a Bloomberg-funded study found that stores’ bottom lines were not hurt by the tax.
Another study examines changes in soda pricing at the Philadelphia International Airport, which straddles the border of Philadelphia and Delaware County and therefore has only some vendors who are subject to the tax.
Politicians on both sides also dispute whether the tax has led to a loss in jobs.
March 2018: City adjusts to lower-than-expected revenues
As Kenney unveils his proposed fiscal year 2019 budget, the city lowers its beverage-tax revenue projections — and adjusts the size of the programs it funds.
The city lower projections by about 15 percent, and reduce the total number of pre-K seats and community schools the tax will eventually fund. Officials say Rebuild program, initially billed as a $500 million project, will be adjusted as well.
July 18, 2018: Supreme Court upholds tax
In a victory for Kenney, the Pennsylvania Supreme Court issues an opinion upholding the beverage tax.
Lawyers for a group of local businesses, consumers, and trade associations had argued that the levy was an illegal double taxation because consumers already paid a sales tax. The court sided with the city’s argument that the tax was legal because it was a tax on beverage distribution.
The ruling freed the city to begin spending money on pre-K, community schools and Rebuild that had been put on hold during the legal battle.
October 2018: Study on community schools
A study finds that Kenney’s initiative has not yet transformed community schools, but notes some school-by-school victories.
November 2018: Debate elsewhere
Voters in Washington state approve a ballot measure that bans new taxes on food and beverages, while Oregon voters reject a similar ban.
Those votes, in addition to a vote by California lawmakers in July to ban new taxes on soda, represent a shift in the beverage industry’s strategy to fight taxes. The industry went on the offensive to push for ballot questions.
Other cities with taxes on soda include Boulder, Colo.; San Francisco; and Seattle.
Jan. 2, 2019: ShopRite to close
Jeff Brown announces that he will close his ShopRite store in the Overbrook neighborhood, blaming the beverage tax for a 23 percent drop in sales and setting off a new debate about the tax as Philadelphia enters an election year.
The Kenney administration says Brown is simply using the tax as a scapegoat for the store’s problems, noting that elsewhere in the city new supermarkets are opening and that Brown has renovated and invested more money some of his other stores.
Jan. 30, 2019: Johnny Doc indictment
Federal prosecutors announce charges against electricians union leader John J. Dougherty, Councilman Bobby Henon, and others in a corruption case.
The indictment notes that Henon and Dougherty, known as “Johnny Doc,” pushed for the city’s soda tax to exact revenge on a political enemy.
Kenney, who won the 2015 election for mayor with Dougherty’s and his union’s help, said if any such revenge plot existed it had nothing to do with him. The mayor said he only discussed the tax as a way to pay for pre-K.
March 15, 2019: ShopRite closes, City Council legislation takes aim at tax
Jeff Brown closes his Overbrook ShopRite, and customers mourn the loss of their neighborhood grocery store.
The same day, Councilwoman Maria Quiñones-Sánchez introduces legislation that could amend or phase out the tax. She also calls for a City Council-funded study of the tax — a measure that council passes later in March after a heated debate.
The day after ShopRite closes, its landlord announces that Key Food, a New York-based grocery chain, will move into the same location with an expected opening of September 2019.
Spring 2019: Election season
Kenney faced two challengers in the May 21 Democratic primary as he ran for a second term: former controller Alan Butkovitz and State Sen. Anthony Williams. Both were outspoken critics of the tax, but Kenney easily defeated them.
The American Beverage Association spent about $1.5 million during the primary campaign.
In City Council races, a crowded field of candidates included several opponents of the tax. But a majority of candidates who won — and also then succeeded in the November general election — support the tax.
January 2020: Kenney’s second term begins
The tax’s future appears secure as Kenney begins his second term.