US: Philadelphia Soda Tax Comes into Force

c0dd0098-26fc-4df6-81b4-0dd6b7025493articleimage.jpg

04 Jan 2017 --- Despite efforts to legally block the tax on sugary beverages in Philadelphia new legislation is now in effect increasing the cost of soda, diet drinks and other beverages by 1.5 cent-per-ounce. 

The new tax has been met with mixed response. Although there is large support from health advocates, local authorities and some consumers, others are against the levy, including the American Beverage Association which was part of a legal challenge to stop the tax coming into force. 

Speaking with FoodIngredientsFirst Anthony Campisi - spokesman for the Philadelphians Against the Grocery Tax Coalition, a group of more than 30,000 Philadelphians and 1,600 businesses opposed to the beverage tax - claims the tax is already having a negative impact in the area.

“As a result of this 1.5 cents an ounce levy, businesses are being forced to increase prices considerably. In some cases, consumers will be paying more in taxes than the price the products are being sold at,” he says.

“And because this tax hits more than 1,000 different types of beverages – from fruit juices to sports drinks to teas to no-calorie and low-calorie options – it is going to be difficult for working families to avoid paying more.”

“Because Philadelphians with cars or who live near the city’s borders will be able to avoid this tax by shopping in the suburbs, the impact will most heavily be felt in poorer neighborhoods where families don’t drive. This is why we continue to oppose this regressive tax, which hurts both families and small businesses.”

The tax, which will affect sodas, teas, sports drinks, flavored waters, bottled coffees, energy drinks, and other products, will be levied on distributors of sweetened beverages, not on consumers at the time of purchase. It is estimated to raise approximately US$91 million annually for expanding educational programs for young kids in the city, creating community schools, improving parks, landscapes and reaction centers as well as offering a tax credit for business that sell healthy drinks. 

Some products are exempt such as baby formula and drinks that are more than 50 percent made of fresh fruit, vegetables or milk. 

Meanwhile, the Pennsylvania Food Merchants Association claim the tax will cause many products to double in price, putting a financial strain on many consumers. 

“Items such as juice drinks, sodas, teas, sports drinks and fountain sodas will no longer be affordable for many Philadelphia residents,” said David McCorkle, PFMA president and chief executive officer. “This unfair tax will really hurt Philadelphia consumers, who are already challenged to pay for groceries.”

PFMA adds that because the tax is assessed on product distributors, they will have no choice but to increase the price of the products because “food retailers already operate on slim margins and will have to pass the product increase o to consumers.”

“Our members expect to lose business due to this tax,” said McCorkle. “Consumers are going to leave the city to buy their groceries. It will mean lost customers and business for city retailers and could leave them with tough decisions to layoff employees or even close.”

Philadelphia City Council passed the country’s first broad-based beverage tax in June and it came into force on January 1, 2017. 

by Gaynor Selby

Related Articles

Food Ingredients News

INTERVIEW: New Naturex VP Highlights Quality, Authentication and Traceability

21 Feb 2017 --- Naturex recently announced the appointment of Reza Kamarei PhD, to the role of global Nutrition & Health R&D Vice President for Naturex. Kamarei holds four academic degrees in the field of nutrition and food science including a PhD in food science & technology from the Massachusetts Institute of Technology (MIT). He has extensive R&D and management experience in the areas of functional ingredients, nutraceuticals, food and beverages and dietary supplements. 

Food Ingredients News

SPECIAL REPORT: Alternative Proteins Trending – Plant, Insects and Marine Sources

21 Feb 2017 --- Demand for plant-based ingredients like algae, spirulina, seaweed, duckweed, pea proteins is climbing, as the appetite for pulses, non dairy or meat-free alternatives increases - even insects are getting in on the alternative protein scene. Interestingly the consumption of fresh fruit and vegetables is in a ten year decline with no real progress made in Europe, the US or elsewhere despite massive health campaigns pushing for everyone, kids especially, to eat more of the good stuff. 

Business News

Kerry Reports Strong Growth, McCarthy to Retire as CEO

21 Feb 2017 --- The CEO of Kerry Group has announced he is stepping down just at the company releases its preliminary results for last year which reveal a slight climb in revenue to €6.1billion (US$6.4billion). After nine years as CEO, Stan McCarthy, will retire as chief executive in September and as a director of the Group by the end of the year. 
Taking over as chief executive designate will be Edmond Scanlon who is currently president and CEO Kerry Asia Pacific. 

Business News

Record Food and Drink Exports for Britain

21 Feb 2017 --- The amount of food and drink exports in 2016 jumped by 10.5% to a record figure of more than £20bn (US$24.8) billion) as UK manufacturers responded to rapid growth in demand for quality produce, the Food and Drink Federation has said.

Food Ingredients News

KEY INTERVIEW: Andean Grain Address Demand for South American Super Grains

20 Feb 2017 --- The use of ancient grains has sky rocketed over the last few years, and the trend looks set to continue well into 2017. Increasing consumer interest in previously exotic seeds like chia and quinoa has fueled the application of seeds and grains in general.

More Articles