Will Philly’s New “Soda Tax” Effectively Discourage Sugary-Drinks?

Beverage giant PepsiCo has just announced plans to cease sales of its six-pack cans and two-liter bottles in the city of Philadelphia, thanks to the city’s new—and controversial—“soda tax.”

At the beginning of the year, the city enacted its new soda tax—1.5 cents per ounce—on all “sugary drinks” in an effort to encourage healthy eating/drinking habits. Of course, manufacturers don’t want to bear the cost so they pass it on the customer and that effects overall sales. Keep in mind, too, that this includes not just soda but all beverages that are “artificially sweetened.”

Democrats, of course, are now accusing all beverage companies who “pass the cost on” to the customers—of “gouging” customers, essentially—in an effort consumers will grow frustrated. Until then, though, Pepsi is choosing to cut its losses, so to speak, by reducing its product variety in the city of Brotherly Love.

In all, the “tax” amounts to 18 cents per 12-ounce drink; or roughly $1.08 for a six-pack of 12 oz cans, $1.44 per six-pack of 16 oz bottles, or $1.02 per two-liter bottle. More importantly, though, the city says the tax can help to raise $91 million in revenue every year, money which the city plans to use expand pre-K education programs, build more community schools, and reinvestment in local parks and recreation centers, as well as improve the city’s general fund.

Effectively, Pepsico said, in a statement: “Because of the costly Philadelphia Beverage Tax, hard-working, value-oriented families are less able to afford larger package sizes and multi-packs, where the tax burden is the greatest. We are offering the products and package sizes working families are more able to afford because we believe this will give our retail and food-service partners the best chance to succeed in this challenging environment and will minimize the chance of product going out of date. Our full portfolio of beverages in all package sizes will still be available outside the city.”

But is this really a “victory” in terms of reducing sugar intake for health’s sake? Sure, it will discourage people from buying sugary beverages but, its not like fans of soda will have to go very far to get what they want.

Maria Koutsouradis, of Bell Market, in Rhawnhurst, comments, “If a customer chose to go outside of the area, they would get their 12-pack and get it a lot less expensive. They would also pick up other items while they’re there.”