How Philadelphia passed a soda tax

Philadelphia on Thursday became the biggest US city to pass a soda tax when its city council voted 13 to 4 in favor of a 1.5 cent-per-ounce tax on sugary and diet drinks to begin in January.

The American Beverage Association, an industry group that represents companies such as Coca-Cola and PepsiCo and has fought the tax in Philadelphia and in other US cities, said it would take legal action to stop the tax.

Though soda taxes – reminiscent of hard-won tobacco taxes of the 20th century – have become popular globally as experts have increasingly linked sugar consumption to health problems and rising health-care costs, they've so far failed to pass in most major US cities including New York, San Francisco, and Oakland, Calif. Those who oppose them argue that government should have no role in controlling what people eat and drink.

This is why Philadelphia Mayor Jim Kenney focused his soda-tax campaign on its fundraising potential instead of on health implications associated with sugar. The city needs to restock its depleted coffers, which Mayor Kenney attributes to the city's success in defeating the soda industry's anti-tax campaign.

"If you want to tax something and people know where the money's going to go, then it's easier for them to get behind it," Kenney told Reuters.

The measure is projected to raise $91 million in its first year. Kenney has pledged to spend the money on public programs such as universal pre-kindergarten.

Residents of San Francisco, Oakland, and Boulder, Colo. will vote in November on similar taxes. If they pass, they could contribute further to a decline in US soda consumption, which fell for the 11th straight year in 2015, according to Euromonitor data.

Berkeley, a much smaller city than Philadelphia, was the first American city to pass a soda tax in 2014. Overseas, Britain announced in April that it would tax sugary drinks in 2018 to rein in childhood obesity.

"We understand that tax affects behavior. So let's tax the things we want to reduce, not the things we want to encourage," said George Osborne, the Britain's chancellor of Exchequer, according to CNN Money.

Mexico introduced a 10 percent soda tax in 2013 aiming to reduce obesity. It reportedly has contributed to a 6 percent decline in purchases of sugary drinks. Other European countries have also taken on sugar and other bad habits.

"Data on the effectiveness of these measures, while not always robustly evaluated, suggests that reductions in sales have been seen as a result of the imposition of taxes in Norway, Finland, Hungary, France, and Mexico," reported the British government's health advisory group in 2015, when the country was considering the tax.

Public health experts are evaluating whether sugar taxes affect obesity rates, so it is not yet clear if the tax is effective in changing habits.

As The Christian Science Monitor recently reported:

Denmark, for example, introduced a tax on foods high in saturated fat in 2011, widely called a 'fat tax,' but dropped it (and plans for a sugar tax) a year later because people simply crossed into bordering Germany to shop and failed to change eating habits, the Danish government said.

In the United States, similar soda taxes have failed to pass in New York State and San Francisco. Only Berkeley, Calif., has been able to pass a soda tax in 2014, though it is not yet clear whether it is helping to reduce obesity rates.

The New York Times points out that while soda taxes have failed, the debates over soda taxes have drawn public attention to health concerns and helped wean many Americans off sugary beverages.

Sales of full-calorie soda in the country have plummeted by more than 25 percent in the past couple of decades.

'The drop in soda consumption represents the single largest change in the American diet in the last decade and is responsible for a substantial reduction in the number of daily calories consumed by the average American child,' the Times reported.

This report contains material from Reuters.