Council to hold hearing on soda tax

The fight over whether to tax sugared beverages moves to a new front today as City Council hears testimony on whether the proposed levy will put people out of work.

The beverage industry, the Teamsters, and local retailers say the answer is yes - and they plan to pack the hearing with 100 or more truck drivers, warehouse workers, and other industry employees whose jobs they say are at risk if the proposed tax of 2 cents an ounce on sweetened beverages becomes law.

Both sides are lobbing numbers in an effort to make their case.

The Teamsters and the beverage industry, for example, say the tax will kill at least 1,000 of an estimated 13,000 food-store jobs in Philadelphia. They also say that some of the 2,000 area jobs in the beverage industry, including drivers and workers at four regional bottling plants, would be lost.

They base their numbers on estimates from industry consultants of job losses in New York state connected to a 1-cent-per-ounce soda tax there that never passed.

The American Heart Association counters that increased consumption of sugar-sweetened beverages between 1990 and 2000 contributed to 130,000 new cases of diabetes, and 14,000 new cases of coronary heart disease.

Mayor Nutter has proposed the levy as a way to raise $77 million yearly and reduce consumption of the drinks, which some research says is a big factor in the increase in overweight and obese people.

Of course, no one can predict for sure what effect the assessment would have because its size is unprecedented. It's also not known how retailers would implement the tax. If they simply raised overall prices, rather than just on sugared beverages, sales of those drinks might not fall.

And even if the tax is carried out as the Nutter administration hopes, no one knows how consumers will respond. If they substitute diet drinks, fruit juice, and bottled water, the impact could be small. If they embrace Philly tap water, the beverage industry could take a big hit.

"The whole analysis of switching is very complicated, and there is probably no real way to predict what the consumer will do in advance," said John Sicher, editor of Beverage Digest, a trade publication. But he also said soda sales are very sensitive to price changes, leading him to believe a tax could hit hard.

Area retailers, Teamsters, and beverage companies recently created a Web site, www.savephillyjobs.com, to press their slogan, "Philly Jobs. Not Taxes."

"If the mayor was successful in passing this new bill, I believe we will lose about 50 percent of our members in soda today, because less sales equals less volume, and less volume means loss of jobs," said Danny Grace, secretary-treasurer of Teamsters Local 830.

About 1,500 of his members work distributing soda, he said, including those at the Coca-Cola bottling plant at 725 E. Erie Ave, the Pepsi plant on Roosevelt Boulevard, and at Canada Dry Delaware Valley in Pennsauken.

Nutter's spokesman, Doug Oliver, called concerns about jobs "misleading."

He argued that consumers would simply buy beverages without added sugar, including water, milk, and fruit juice. He also said the tax would help avoid cuts to libraries, police, and recreation centers.

At Yale University's Rudd Center for Food Policy and Obesity, economist Tatiana Andreyeva has predicted a drop-off of 23 percent consumption of sweet drinks covered by a 1-cent-per-ounce tax on drinks, based on studies documenting consumers' reactions to price increases on soft drinks.

Andreyeva said that consumption would likely shift to other drinks, most of them produced by the same companies. "Overall, in sales for the industry, we definitely don't expect significant reduction," Andreyeva said.

In an Internet seminar last week, Rudd Center director Kelly D. Brownell listed the jobs argument as typical for the industry's defense. "This is, of course, meant to play to people's interest in the bad economy," Brownell said. He predicted that beverage companies - with Coke and Pepsi controlling 75 percent of the world beverage market - will heavily market other products and drive up the consumption of those alternatives.

Robert Brockway, president and chief operating officer of Canada Dry Delaware Valley, said he believed predicting consumer behavior is difficult. Even if people do substitute unsweetened beverages, local jobs could still be lost, he said. His plant, for example, does not have the necessary equipment to produce fruit juices, which require pasteurization, or water, which is usually produced via reverse osmosis.

He estimated that if the proposed tax cut sales by 25 percent, he might have to eliminate 35 to 40 jobs of 625 total.

Brockway lives in Philadelphia and said he was sympathetic to the city's severe budget problems. He just wants a solution that is broader than a tax on a single industry.

"There's a fairness issue there that just doesn't feel right to us," he said.