The American Heart Association was instrumental in pushing tobacco taxes and is now a leading proponent of soda taxes. | Getty Philly’s soda tax may be turning point

Philadelphia on Thursday became the first large American city to impose a sin tax on soft drinks in what could be a tipping point in the long-running war between health advocates and the soda industry.

After months of contentious debate, the city council voted 13-4 to approve a 1 and a half cent per ounce tax on sugary and diet drinks to fund children's education and park programs in the city.


The multimillion-dollar political fight in Philadelphia wasn’t about health. Philly Mayor Jim Kenney, the proponent of the tax, has been clear his push is about revenue for the city — more than $400 million over five years — and any public health bump from cutting soda consumption is a secondary benefit. But health advocates who strongly backed the tax proposal are ecstatic that a major city has finally broken through.

“Philly is really groundbreaking,” said Jim Krieger, president of Healthy Food America, a nonprofit that helps local groups mount efforts to promote anti-sugar policies like soda taxes and warning labels. “It’s going to unleash the next wave of tax efforts across the country.”

It could be a big year for soda taxes. Krieger said he’s already heard from several new locales interested in exploring tax options, though he declined to list them. Meanwhile, left-leaning Boulder, Colo., and San Francisco, Oakland and Albany, Calif., are already slated to consider sugary drink taxes on the ballot this year.

Philadelphia’s move lends momentum to those efforts, Krieger said.

The American Beverage Association, which represents Coca-Cola, PepsiCo and Snapple Group, said after the vote Thursday it plans to sue to stop the tax.

"The tax passed today is a regressive tax that unfairly singles out beverages – including low- and no-calorie choices," the association said in a statement. "But most importantly, it is against the law."

The beverage industry has been incredibly successful at defeating soda tax proposals over the past decade. The American Beverage Association points to 43 victories since 2008, in communities ranging from New York state to Telluride, Colo. Soda tax proposals have also been twice quashed in Philadelphia.

When Berkeley, Calif., voted in 2014 to approve a penny per ounce tax, many dismissed the significance of the move as an anomaly involving a tiny liberal enclave. Philadelphia is also liberal, but it’s the fifth largest city in the country, and it’s much more diverse than Berkeley. Health advocates hope Philadelphia’s success will send a signal to local leaders across the country that soda taxes are moving to the political mainstream, and that they’re a good way to raise money and improve health at the same time.

Of course, not everyone sees Philly as a turning point.

“No one looks at Philadelphia as a bellwether,” said Grover Norquist, president of Americans for Tax Reform, which came out strongly against the Philly soda tax earlier this month. “It’s a declining city. … It’s a labor union-controlled city where the unions raise taxes on anyone they goddamn want to.”

Philadelphia had twice before floated the idea of a soda tax under the auspices of health promotion — in 2010 and 2011 under Democratic Mayor Michael Nutter — but both times, the idea was sidelined under intense industry pressure. In 2011, it was widely believed the city dropped its bid for a soda tax after the beverage industry gave the Children’s Hospital of Philadelphia $10 million.

This time, Kenney, who had previously opposed Nutter's soda tax attempts, worked with health advocates, but the messaging was all about a new revenue stream to support pre-K, as well to fix up parks and recreation centers in the struggling city — and that message was much harder to counter.

The proposal, which raises $91 million total each year, cleared a major hurdle last week, by passing out of a committee made up of the whole council. The tax rate, which was originally proposed to be three cents per ounce, was cut in half and changed to include diet drinks, which will provide an estimated $14 million in revenue.

After hours of hearing intense public commentary on both sides, the city council on Thursday approved the tax mostly along party lines, though one Democrat voted against the tax along with Republicans.

The American Beverage Association is quick to contradict any suggestion that Philadelphia will open up the floodgates to more soda tax proposals. Philly is unique, the trade group contends, because the mayor is new (Kenney, also a Democrat, was elected in January after serving on city council for 25 years.), politically powerful and he justified the tax purely as a way to fund universal pre-K.

“It was very much inside baseball, local politics,” said ABA spokeswoman Lauren Kane. In Philadelphia, the “stars aligned” in a way that’s unlikely to be repeated, she said.

Opponents have also seized on the fact that the pre-K plan would extend to only about half of eligible kids, and 20 percent of the funds from the tax would go to other city programs — two recent revelations that have infuriated some on the city council.

Lauren Hitt, a spokeswoman for the mayor, said the funding for pre-K would increase as the city increases capacity. "The programs take time to ramp up and they won't be at full cost the first years," she said. In three years, the mayor is planning to do a review of the programs to figure out how to get to universal pre-K coverage, she said.

“It’s very much a last-minute desperate attack on their part," Hitt said of the beverage industry.

The anti-tax campaign on the ground in Philadelphia, called No Philly Grocery Tax and funded by the ABA, is also extremely dismissive of the idea that the action will influence the rest of the country.

“I just don’t think anybody can look at what happened here and think it can be replicated in another municipality,” said Larry Ceisler, a communications consultant working for the No Philly Grocery Tax coalition.

Ceisler said it would be wrong for other politicians to think such taxes are politically viable.

“This was tough, this was a really tough road,” Ceisler said. “We won the outside game; we lost the inside game.”

The industry-backed anti-soda tax campaign, which spent at least $4 million on ads, did appear to sway public opinion in a big way. The ABA released a poll last week finding a majority — 58 percent — of Philadelphia residents don't support the tax proposal, a flip from March when 54 percent of voters were found to support the idea.

Philly tax supporters have also spent big with outside money. Philadelphians for a Fair Future, the coalition supporting the mayor’s plan, has spent more than $1 million on ads, with significant financial backing from former New York City Mayor Michael Bloomberg and Laura and John Arnold, a billionaire philanthropist couple in Houston who have become involved in pro-soda tax efforts.

The Arnolds personally gave $400,000 to Philadelphians for a Fair Future and another $75,000 to the American Heart Association in support of the Philadelphia effort.

It’s all part of an increasingly sophisticated and well-funded push to back soda taxes wherever they might be viable. Health advocates are trying to make the taxes as appealing to local pols as tobacco taxes became in the 1990s, with the hope they can change behavior and prevent cases of diet-related diabetes, obesity and cardiovascular disease -- health ills that cost the country billions in preventable health care costs. Philadelphia is a big win for them.

Michael Jacobson, president of the Center for Science in the Public Interest, called the city's tax "a game changer."

Rachel Johnson, a nutrition professor at the University of Vermont, and a volunteer spokesperson for the American Heart Association, is also upbeat. “I think we’ll see the dominoes start to fall,” she said.

Bloomberg responded to the city council vote Thursday by pledging more support for taxes.

"I will continue working to ensure that cities and nations pursuing these anti-obesity strategies get the support they need to level the playing field with the soda industry," he said

"...Philadelphia will almost certainly not be the last city to adopt a sugary drinks tax," the former New York City mayor added. "In fact, the question now is not whether any city will follow suit, but rather how many – and how quickly?"

Beyond Philly, tax proponents are eyeing even bigger fish.

The American Heart Association, which was instrumental in pushing tobacco taxes and is now a leading proponent of soda taxes, is pressing lawmakers in Alabama to take up a sugary drink tax as a way to fill an $85 million hole in their budget due to increased Medicaid costs. A statewide soda tax there would raise $200 million each year, advocates say.

The Arnolds — which have grown increasingly active in their backing of anti-sugar policies — are also backing the effort in Alabama. Through Action Now Initiative, a 501(c)(4) the couple funds, they gave $300,000 to the American Heart Association this year to support the tax push, according to a spokeswoman. The couple, both personally and through Action Now Initiative, said they are supporting soda tax efforts in San Francisco and Multnomah County, Ore., the county surrounding Portland, as well as statewide efforts in Illinois, which have been floated for several years.

There’s no question that instating a soda tax in Alabama, a red state that consistently ranks among the most obese, would make a much bigger statement than Philly.

“If there was a place in the South that would take this on and do it in an effective way, that would be a real breakthrough,” said Krieger.

Illinois, another key Rust Belt state, is another big target for health advocates. Though the state is in need of funds and a tax proposal has bipartisan support, a long-running effort to get a tax there hasn’t gained traction.

Still, win lose or draw on tax proposals, health advocates feel they are winning the larger war against sugary drinks. Per capita consumption of full calorie soda is down by more than one-quarter since the late 1990s and continues to fall.

The American Heart Association found in Vermont, for example, that attitudes about sugary drinks shifted quite dramatically after the state legislature considered a soda tax, even though the measure failed.

When advocates did message research in 2012, they found that 18.9 percent of Vermont residents said they didn’t drink any sugary drinks. In 2013, after a soda tax debate played out in the media, they tested the same question and found that nearly 50 percent of respondents said they don’t drink any sugary drinks — a figure that’s almost certainly inflated, but indicates that there may be a greater stigma now attached to sugary drink consumption.