Philadelphia Mayor Pens Op-Ed for Spirit News Readers
Since I took office in January 2016, I have partnered with a different neighborhood paper each month to answer their readers’ questions. Spirit News asked if this time, instead, I would write an op-ed on the budget I proposed to City Council on March 2nd and the Philadelphia Beverage Tax.
With regards to my budget proposal for the 2018 fiscal year, I asked City Council to invest in two major areas: health and human services that will uplift our most vulnerable; and job-creating initiatives that will create economic opportunity for all Philadelphians.
Our health and human service investments are targeted at strengthening our child welfare system and combating lead poisoning, opioid addiction, and homelessness. The job-creating initiatives outlined in the budget are focused on spreading Philadelphia’s resurgence to all our neighborhoods and to assisting Philadelphians facing barriers to employment.
Most notably, Rebuild, the City’s $500 million project to renovate parks, rec centers and libraries funded by the Philadelphia Beverage Tax, will kick off this summer. I also announced a plan to borrow $90 million over the next six years to build a cap over I-95 and transform Penn’s landing into a civic and economic hub.
The budget also seeks to make Philadelphia stronger economically across the board by continuing the city’s reduction of wage and business taxes, instituting pension reform, and by making important investments in transportation and public safety. Perhaps most excitingly for residents, these investments in transportation include an additional $170 million investment in street repaving.
I will use the remainder of this space to answer some of the frequent questions we receive regarding the Philadelphia Beverage Tax.
Where is the tax revenue going? I heard most of it actually isn’t going to pre-K, schools, parks, rec centers and libraries.
Those programs are still ramping up, so this year, 75 percent of the tax revenue is going towards pre-K, community schools and Rebuild (the investment in parks, rec centers and libraries). When those programs are fully operational in two and a half years, they will receive 97 percent of the tax revenue. The remaining 3 percent of revenue is spent on the Healthy Stores Tax Credit, which was passed in the spring to help small businesses negatively impacted by the tax, and to cover costs to collect the tax.
To date, the tax has funded 2,000 free, quality pre-k seats which has in turn created 251 jobs in the early education sector. The number of seats is expected to grow to 6,500 over the next five years. The tax is also currently supporting nine community schools that serve 4,500 students, 75 percent of whom are living at or below the poverty line. Community schools address the issues our children face outside the classroom that often inhibit them from learning, like hunger, poverty or trauma. The tax will also support the renovation of parks, rec centers and libraries through a program called Rebuild. That program will launch in mid-2017.
Pepsi and other soda sellers are saying the tax is causing mass job lay-offs.
This is the same industry that spent $10 million and made plenty of misleading claims trying to kill the tax, and is now funding a lawsuit against the city over it, so we should be skeptical of any unverifiable numbers that they put out. It’s particularly tough to accept their claim that they have to lay off workers now when they are still spending hundreds of thousands on advertising, lobbyists and lawyers.
While a decline in sugary drink sales is what health experts want and expect, it is not at all a reason to expect business or job losses. In Mexico, a soda tax was followed by a drop in sales of sugary drinks, but that fall was balanced by an even bigger increase in the sales of bottled water and other untaxed beverages. Philadelphia has also seen with its liquor and amusement taxes that while people initially drive outside the city in anger, they eventually stop commuting because of the time and expense required to make those trips.
I heard the tax is regressive.
The soda industry disproportionately advertised in low-income, minority communities for decades and, as a result, those communities suffered from regressive, expensive diseases like diabetes and obesity. This tax asks industry to give a little money back to those they’ve profited off of for decades so the city can fund critical anti-poverty programs, namely pre-k, community schools and parks, rec centers and libraries.
Why are juices and milk substitutes taxed?
100 percent juices are only subject to the tax if the phrase “added sugar” is on the label, or if they have an added sweetener, which you can tell by reading the nutrition label. Unsweetened milk substitutes are also not taxed and even sweetened substitutes that are nutritionally equivalent to milk are not taxed. To find a list of non-taxable juice and milk substitute brands, go to phillybevtax.com