To say that Mayor Nutter’s proposed “Healthy Philadelphia Initiative”—the two-cents-per-ounce junk-drink tax—is in disarray would be charitable. City Council grows increasingly hostile toward the plan. A loophole might negate its stated health goals. Bottlers and drivers worry that the tax will cost them their jobs. And soft-drink lobbyists and others—most notably, a Coke bottle-wielding John Street—claim that the tax will burden the poor.
Many opponents of the bill have a right to be concerned. This new tax would most likely force soda drinkers off the sauce, and a citywide decrease in purchases would inevitably lead to some degree of job loss for convenience-store owners and workers at the area’s three bottling plants. While the job-loss numbers being pushed by the industry are likely inflated —“1,000 of 13,000 food-store jobs” and “2,000 area jobs in the beverage industry,” according to the Inquirer —any addition to the city’s bloated 10.6 percent unemployment rate is unwelcomed. For Coke and Pepsi, the “jobs” argument is a shrewd one, given the general teeth-gnashing over the economy.
But the other popular stance against the bill—that it’s an attack against the poor—stands on less solid ground.
Invoking “everyday working poor people” while waving his empty bottle, Mr. Street proclaimed, “Coke costs a dollar eighty-nine cents; the tax would be $1.34 … that’s a 70 percent tax.” His assessment was championed by Alvin Pothoff, who wrote at the Republican Action Network’s website of the tax’s effects on a fictional, chocolate milk-swilling “Little Jimmy”:
[Because of the tax,] Jimmy’s weekly total increases 12 percent by the end of the week to over $14 … this is a large increase to a low-income family … This would be a tax of more than $38 a month for a family of three who consume two servings of chocolate milk a day ... Street called this tax what it is, a tax on the poor.”
Both Street and Pothoff are accurate in their calculations. And as Isaiah Thompson noted in a recent City Paper column, “soda drinkers [are] more likely to be lower income, less educated and non-white.” But the effect that the tax will have on the poor is based on assumptions about the consumers.
In Pothoff’s view, once the drink tax takes hold, Little Jimmy—as well as Philadelphia’s real-life Quik enthusiasts— will be incapable of drinking less chocolate milk. John Street, too, puts little faith in “everyday working poor people” by implying that they’ll be helpless to muster slight shifts in an inessential habit. But both researchers and industry followers believe that Philadelphians—whether poor and/or uneducated—will do just that, predicting a 25 percent drop in sales.
So the tax would affect the poor, but not for very long. Once that “70 percent tax” brings each purchase into focus—Is this jug of syrupwater really necessary?—soda, one hopes, would return to its traditional role: an every-so-often treat.
This is not to say that Nutter’s plan is genius (or that its anti-obesity aspect is much more than a lucky two-for-one). The bill’s critics are right to call it a contradictory mess—the idea that the city hopes to make $77 million in perpetuity from a tax that will force plunging consumption is questionable. But weigh the beverage tax against Nutter’s other loathed proposal: the $300 annual trash fee. The euphemistic “Keep Philly Clean” tax would be the same in Mantua and Society Hill, and, most importantly, its payment would be obligatory. There would be no such imposition on the purchase of Barq’s.
If Philadelphians really want to witness a true affront to the poor, they need look no further than across the Delaware. With his first proposed budget last week, New Jersey Gov. Chris Christie called for “decisive action to reduce state spending.” This included a $1.3 billion cut to school and city aid, suspensions to promised property tax rebates and a contraction of a tax-freezing program for seniors.
Garden State residents took an unusually hard hit, one that will unequivocally harm the poor: cuts to child-care programs, school lunches and tax credits for the working poor. One community-college scholarship program will halt new enrollment, and welfare for the “able-bodied” will be eliminated. This is in addition to Christie’s February cut to NJ Transit, which will impose a 25 percent fare increase on commuters. Earlier this month, the new governor dropped the entry ceiling for the state’s subsidized health-care program—from $77,000 to $29,000 for a family of four.
Given New Jersey’s fiscal apocalypse, such carving was necessary. In the face of an $11 billion deficit, it would be irrational to expect Christie not to pare these programs (and given Philadelphia’s dour prospects. similar hacking may be in our own future). But New Jersey’s cuts might not have been so deep, or even necessary, had Christie reinstated a 2009 tax increase on residents earning more than $400,000. Its renewal would have brought the state close to $1 billion; by letting the tax lapse while simultaneously whacking the poor, Christie seems more callous than tough.
But Christie’s anti-tax stance is, after all, what got him elected: “I was not sent here to approve tax increases; I was sent here to veto them,” he said last Tuesday. “It is time for the tax madness to end.” No doubt these are fraught times in the Garden State, yet for its residents there is a small silver lining: from the Highlands to Cape May, they can unwind with a cold, refreshing can of Mountain Dew—still a bargain at just 75 cents. ■
Now that that program, launched in 2010, is in full effect, beverage advocates seem to be running scared, putting together their own harsh ad campaign that’s either late to the federal health-reform party or early to the fight that Nutter and other local leaders may have in store later this year. And with the city budget still hurting, some believe the Nutter Administration may give the soda tax another stab.
"I like to buy things that are two-for-one,” says Councilman Brian O’Neill. “Well, this is the reverse of that! This is the one-for-two tax. You pay for two, and you get one.”
With the soda and garbage taxes too controversial, Council has resorted to new, slightly more progressive taxes to balance the budget. Not surprisingly, there are still problems.
A number of investigative and watchdog bodies actually operate inside city government. Each office has its limitations, however, leaving oversight on certain areas of government thin to nonexistent. Specifically, City Council manages to largely escape scrutiny.
Nutter hinted that layoffs could be in our future if he and Council can’t find common ground on new sources of revenue.
Surprise! It's a tax on tobacco.