The soda tax was proposed by Mayor Michael Nutter as a way to help close the state’s budget deficit of around $130m.
Nutter said that the decision not to include the tax could cause job losses, including cuts to police and fire departments, as well as reduced free library services. To offset the revenue that would have been raised through a soda tax, the state approved a 9.9 percent increase in property tax, a doubling of commercial trash collection fees, and a new tobacco tax.
“Today the big soda lobby won and average Philadelphians lost,” Mayor Nutter said in a statement. “The high-paid lobbyists, only some of whom actually live in the city, have made money and will go back to their lives as usual while Philadelphians will face a very real reduction in City services. A tax on sugar-sweetened beverages would have been a way to both provide the City with much needed revenue and improve the health of residents.”
Originally, Mayor Nutter had been pushing for a two-cent per ounce tax on sugary beverages, but during the last days before the budget was passed, he was campaigning for a ¾-cent tax per ounce. It was estimated that a tax at that level would have generated about $30m a year, but only $14m in the first fiscal year, as it would not have been enacted immediately. The two-cent per ounce tax would have raised about $77m annually, it was estimated.
The beverage industry has campaigned strongly against the tax in Philadelphia, as it has in other areas of the country, taking out advertisements across a range of platforms.
The American Beverage Association in particular has been vocal in its criticism of soda taxes, calling them “sound bite solutions” and “a money grab at the expense of hard-working families”.