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Kenney budget to include proposed soda tax

Mayor Kenney will introduce a tax on sugary beverages as part of his budget this week, according to sources familiar with the matter.

A tax on sugary beverages could help fund some of Mayor Kenney's costly and ambitious ideas.
A tax on sugary beverages could help fund some of Mayor Kenney's costly and ambitious ideas.Read moreYONG KIM / File photo

Mayor Kenney will introduce a tax on sugary beverages as part of his budget this week, according to sources familiar with the matter.

The soda tax, as it is usually called, was a tried-and-failed effort by Mayor Michael Nutter. But Kenney, who came into office in January with several large and costly ideas, including universal prekindergarten, has found that there aren't many streams of revenue available that wouldn't include raising taxes or creating a new tax.

Sources say a soda tax is Kenney's only option to get funding for his ambitious plans. But that won't be enough to convince Philadelphia residents with a sweet tooth.

"This makes me sad," said Cheryl Caldwell, 50, who is unemployed and says she gets her daily caffeine fix from Mountain Dew. "The city's taking everything away, and they don't know how to manage their money. What is the alternative, make your own soda?"

Paul Grant, 52, also felt outraged by the "terrible" idea, and suggested the city spend less on other things "instead of raising the price of soda."

Speculation that the Kenney administration would take on the soda industry began when the mayor hired Dr. Thomas A. Farley to be the city's health commissioner in early February. During his tenure as New York City's health commissioner, Farley attempted to ban soda drinks larger than 16 ounces. The city implemented the ban, but a New York State appellate court overturned the decision, killing the ban.

Kenney is expected this week to announce details of how much the tax will be, what it applies to, and how much money it is expected to generate.

Sugary drink taxes typically mean sugar-sweetened beverages, including soda, sports drinks, and sweetened ice teas. In Berkeley, Calif. - the only U.S. city to impose a soda tax - fruit juice, alcohol, and milk-based beverages are not included. Berkeley's levy is one cent per ounce.

Nutter had proposed a tax of two cents per ounce. He emphasized the effects of sugary drinks on obesity as well as the need to fill a budget gap. Kenney would likely champion both the health benefits and the revenue opportunity.

A tax of two cents per ounce would raise the price of a typical 16-ounce soda by 32 cents and bump the price of a 7-Eleven Big Gulp by 64 cents.

Caldwell said that if the tax passed, she would buy less Mountain Dew in Philadelphia and would stock up when she leaves the city's borders. Grant said he'd find a Costco and start buying in bulk.

The American Beverage Association, a trade association representing America's nonalcoholic beverage industry, has disputed the notion that raising taxes on soda could reduce consumption, saying the higher prices would harm local businesses and burden low-income consumers.

"The soda tax is an old idea that has been rejected in the past for good reason," ABA spokeswoman Lauren Kane said in a statement Sunday afternoon. "Philadelphians have been burdened year after year with tax increases, and a new tax on soda would just be another tax on hardworking Philadelphia residents and neighborhood businesses.

"Philadelphia's beverage companies have deep roots in the community and provide thousands of good-paying jobs in the city," she continued. "We are committed to continuing to work with city leaders to support a strong community that is a great place to live and work for everyone."

In the U.S., about 10 percent of all obesity- and diabetes-related deaths under age 45 are attributable to sugar-sweetened beverage consumption, according to research by Dariush Mozaffarian, dean of Tufts University's Friedman School of Nutrition Science and Policy.

Illnesses attributed to sugary drinks also take an economic toll in lost productivity - and because companies and governments skimp on other priorities when they have to spend money on diet-related health care, Mozaffarian said in an article on Tufts' website.

Last month, Bloomberg Philanthropies announced that its study of Mexico's soda tax shows a drop in soda consumption resulting from tax.

The proposal could make for an interesting fight on City Council, which twice blocked Nutter's attempts to tax sugary drinks. Kenney himself opposed Nutter's proposal. Council President Darrell L. Clarke led that opposition and successfully pulled others to his side.

But Kenney has recruited to his cause newly minted majority leader Councilman Bobby Henon, who during budget negotiations last year was on the verge of proposing the tax himself.

"I get the sense they're looking to [Henon] to make the determination," said a Council source familiar with the conversations. "If Bobby feels there's even a slight chance [of it passing], he'll probably move forward with it."

Insiders say Kenney could have a far better shot than Nutter at getting the tax approved, in part because, just weeks into his term, his relationship with Council still is rosy.

But opposition from lobbyists, who during previous attempts to pass the tax swarmed City Hall, is likely to be fierce. Several of those same faces were seen in the building last week.

In 2011, Harold Honickman led opposition to Nutter's proposed soda tax, and with good reason: Honickman's Canada Dry distributorship (which also handles Snapple, Frank's, and many other brands, as well as bottled water) controls 20 percent of the metro Philadelphia soft-drink market.

Honickman could not be reached Sunday night, but in 2011 he argued that it was unfair to single out sweet drinks.

"I think there should be a sugar tax in the whole city," Honickman said. "Why isn't ice cream, cookies, candy part of this?"

"There's no way they're getting that thing passed," said Susan Lin, 37, a regular at Burger King who doesn't drink soda. "Philadelphia will get all worked up about it even though it could support proposals that would make a difference in the city."

Lin thinks the tax is a good idea, equivalent to a cigarette tax that will reduce unhealthy habits.

"Now, if there were a tax on french fries - then I'd be up in arms," she said as she crunched down on another handful of golden fries.



Staff writers Jill Castellano, Jacob Adelman, and Joseph N. DiStefano contributed to this article.