What to Know
The Philadelphia Beverage Tax is Mayor Jim Kenney's milestone achievement. It is also the bane of the beverage industry.
The tax, which funds expanded pre-K and construction projects, is more than 2 years old, but a new fight looms ahead of May 21 elections.
New political ads are running on TV, paid for by the Big Beverage lobby, calling on City Council to "ax the tax."
It's the legal battle that refuses to go flat.
The Philadelphia Beverage Tax, as it's formally known, or the soda tax, as it is sometimes called, turned 2 years old on Jan. 1, 2019.
The feuding over the tax between the Big Soda lobby — the major sellers and distributors of sugary beverages — and Mayor Kenney's administration is even older, since the legislation governing the city levy was signed into law in the summer of 2016.
New political ads paid for by the beverage industry, called "Ax the Tax," are running on local television stations — including NBC10. They began April 6 and are expected to run for two weeks. Other anti-beverage tax ads are likely leading up to municipal primary election.
Here are some of the most asked questions and answers as the battle erupts once again ahead of local elections next month — and why it affects you, even if you live outside the city.
Why does the beverage tax matter in Philadelphia's municipal elections this year?
The tax is Mayor Jim Kenney's biggest achievement. It has raised millions of dollars for two signature city programs started by Kenney: PHLpre-K, which has a goal of expanding pre-K to 6,500 3 and 4 year olds within five years, and ReBuild, a citywide construction project at recreation centers and libraries.
What about the races for all 17 City Council seats?
Council is the new frontier for the anti-tax lobbyists. The new television ad paid for by the American Beverage Association actually targets the city's governing body, calling on lawmakers to push legislation that would rein in or completely end the beverage tax. Big Soda likely sees an angle because of a recent proposal by Councilwoman Maria Quiñones Sánchez to wrestle oversight and control of the tax from the mayor.
Why does the soda industry have a problem with the tax?
The tax is one of the most targeted levies upon any single industry: 1.5 cents per every ounce of every sugary drink. It has reportedly affected a wide scope of the industry, from delivery drivers to grocery store magnates to bodega owners. Opponents have also argued that the tax disproportionately affects lower-income residents in the city.
Why is the tax beneficiary to Philadelphia?
Mayor Kenney and other supporters of the tax say it has two huge benefits: pre-K and making healthier drink options more competitive with traditionally cheaper sugary beverages that dominate the beverage aisle of grocery and corner stores.
Where does the fight stand currently?
The law governing the tax has been upheld by the Pennsylvania Supreme Court, ending the fight over its legality.
Council could approve new legislation — if 9 of the 17 Council members are "yes" votes — that could potentially weaken or end the tax. But Kenney would veto the legislation. Then, Council could only change it by supermajority. Of course, if one of Kenney's anti-sugar tax challengers were to beat him in the primary, that would eliminate the veto.
What would happen to universal pre-K? And the reconstruction of dozens of city neighborhood facilities?
Both Kenney challengers say they support expanded pre-K — which is increasing the size of city-funded pre-K from 2,500 to 3,300 this year and eventually to 5,500. Some Council members who support ramping down the tax also say they support the programs it pays for. But no one has said they have another solution to fund those programs in lieu of the beverage tax. Which brings us back to the new political ads on TV.
What is Big Soda suggesting, beyond "ax the tax," in its new political ads on TV?
Pay for universal pre-K and construction at city rec centers and libraries with the $360 million surplus in the current city budget.
"With more than a $360 million budget surplus to fund important programs like pre-K, the City shouldn’t balance its budget on the backs of Philadelphia’s working families," said Anna Adams-Sarthou, a spokeswoman for the American Beverage Association.
Kenney's administration doesn't want to tap into that surplus, which it refers to as a "fund balance" or "rainy day reserve." Budget surpluses usually occur when tax and fee revenue outpaces government expenses.
"The City actually has low fund balances compared to many major cities, and far lower than what experts say is appropriate," city spokesman Mike Dunn said. "Some experts, in fact, have warned of a looming new recession, and so the Mayor’s proposed budget sets aside some of the fund balance as a 'Rainy Day' reserve in case the U.S. economy faces a downturn."