On June 16, 2016, the Philadelphia City Council adopted legislation implementing a city-wide excise tax on nonalcoholic sugar-sweetened and diet beverages.[1] Levied on distributors, the 1.5 cent-per-ounce beverage tax went into effect on January 1, 2017.
The tax, which is 24 times the state excise tax rate on beer, has received mixed reviews among constituents. Some Philadelphians support the tax for the programs it funds. Meanwhile, local business owners and workers have filed lawsuits against the tax.
From an operational standpoint, the tax rollout continues to create problems for the city as collections have come in less than projected. In July, city officials lowered beverage tax revenue projections by 14 percent, leaving the pre-kindergarten programs that the tax promised to fund in jeopardy.[2]
Furthermore, soda taxes are regressive, hurting low-income earners the most.[3] Philadelphia’s experience serves as a cautionary tale for other areas weighing similar beverage taxes.
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