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Philadelphia becomes first major US city with 'soda tax'

Published 17/06/2016

Jim Kenney sold the council on a plan to spend most of the new tax revenue next year on nurseries, community schools and recreation centres (AP)
Jim Kenney sold the council on a plan to spend most of the new tax revenue next year on nurseries, community schools and recreation centres (AP)

Philadelphia has become the first major US city with a soda tax despite a multimillion-dollar campaign by the beverage industry to block it.

The city council gave final approval to a 1.5 cent-per-ounce tax on sugary and diet beverages. The tax is set to take effect in the city, which markets itself as the place where the first flavoured carbonated beverage was sold, on January 1.

Only Berkeley, California, has a similar law. Soda tax proposals have failed in more than 30 cities and states, including twice in Philadelphia, in recent years. Such plans are typically criticised as disproportionately affecting the poor, who are more likely to consume sugary drinks.

Democratic mayor Jim Kenney sold the council on the idea with a plan to spend most of the estimated 90 million dollars (£63 million) in new tax revenue next year to pay for nurseries, community schools and recreation centres.

"Thanks to the tireless advocacy of educators, parents, rec center volunteers and so many others, Philadelphia made a historic investment in our neighbourhoods and in our education system today," he said.

The tax, which passed 13-4, was a hard-fought win for the city. The soda industry spent millions of dollars advertising against the proposal, arguing the tax would be costly to consumers. The plan also attracted national attention and dollars, with former New York mayor Michael Bloomberg and Texas billionaires John and Laura Arnold, advocates for less consumption of sugary drinks, funding ads in support.

The American Beverage Association called the soda tax "discriminatory and highly unpopular".

"The tax passed today is a regressive tax that unfairly singles out beverages, including low and no-calorie choices," it said a statement.

The association and beverage bottling businessman Harold Honickman promised to fight the tax in court, with Mr Honickman saying it would mean sales will go down and jobs will be lost. He said he could file a lawsuit as soon as this weekend.

Many communities where soda tax proposals have failed sought it as a way to discourage consumers from buying sugary beverages for health reasons.

The case could certainly be made for a healthier Philadelphia, where more than 68% of adults and 41% of children are overweight or obese, but Mr Kenney focused on public interest over public health.

He said last week that Americans generally reject other people telling them what is healthy for them, so his administration tried to stay away from that. He said any health benefits coming from the tax are a bonus.

Though the tax will not be collected until 2017, it will be included in the fiscal budget that starts on July 1.

Some of the money raised will go to pay for city employee benefits and pet projects of council members and to build up municipal budget reserves.

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From Belfast Telegraph