The rates of obesity in America continue to rise, and many public officials are concerned about the consequences this can bring upon society as a whole. Nearly 70% of American adults are either overweight or obese and more than 35% fall into the obese category. Just over 6% of adults in this country are considered extremely obese, and these weight issues are even beginning to trickle down and affect children as young as three years of age.
The implications of overweight and obesity are enormous and impact many areas of life. The healthcare system estimates that millions of tax dollars are spent annually on issues stemming from obesity. It’s clear that we need a solution to this problem. What’s not clear is what that solution should be. Some states have attempted to offset the problems created by obesity by instituting taxes and other penalties on junk food and soda. Philadelphia is one such example, having created a soda tax in the hopes of reducing the rates of obesity and the adverse effects that stem from it.
What is the Philadelphia Soda Tax?
Philadelphia recently became one of the first states to introduce a tax on sugary soft drinks. This tax took full effect early in 2017. What was the idea behind this 1.5 cent per ounce tax on soda and other sugary drinks? Many public officials felt this tax would discourage people from purchasing and consuming as much soda, one of the many calorie laden products that have resulted in health issues such as weight gain. The thought was that those who were unable to afford to pay this tax would simply stop buying these products and those who chose to pay the tax anyway would be contributing financially toward offsetting some of the costs associated with the health problems that can result from consuming these beverages. While from the outside it may appear to have been a lofty idea with good intentions, the results have been far from what was intended when this tax was brought about.
How is the Philadelphia Soda Tax Impacting Society?
Armed with good intentions and many supportive citizens, the Philadelphia soda tax was seen as a solution to a growing problem that affects all of us in various ways. However, some unintended effects have already been seen in the short time this tax has been in existence.
First of all, this tax affects the low-income citizens of Philadelphia on a much larger level than other citizens who can simply afford to pay more for these drinks. As it turns out, low-income individuals are the largest consumers of these types of soft drinks. Low-income residents of Philadelphia without their own mode of transportation have no choice but to shop at local stores and pay this tax if they want to continue drinking these beverages.
This tax is also negatively affecting small mom and pop types of grocery stores. These stores are already competing daily with major chains who have much more capital, more power, and more advertising dollars. Small grocery stores are also now seeing a major reduction of sales and income due to customers traveling further away to do their shopping at stores in areas that have no tax on these soft drinks. When these previous customers opt to do their shopping at another store, they don’t just buy their soda from another location. They buy all of their groceries at another large retailer, leaving these small grocery stores struggling with a lack of sales. The lost income can be so large in some cases that these mom and pop stores have no choice but to close their doors permanently. In just two short months after the soda tax was initiated, one large retailer experienced an increase in sales of 20% while a small business owner experienced a loss of revenue of over 30%. These numbers are large enough to lead to the death of a small business, creating horrible ramifications for that business owner and his family.
Last but not least, it is estimated that this well-intended tax will result in a multi-million dollar deficit for the state overall. According to one financial advisor, both a short and long term deficit will be created due to the fact that government officials have not been calculating this tax based on accurate numbers. Government officials based their projected earnings from this tax to be far too high, which in the coming years will result in a deficit that will have to be made up for in other areas.
Keep Reading: Philadelphia’s Lawsuit against Wells Fargo Explained
Soft Drink Industry Appeal of the Philadelphia Soda Tax
It should come as no surprise that this tax has also negatively affected the soft drink industry. Canada Dry and Pepsi both reported that their Philadelphia branches had laid off as many as 20% of their employees since this tax came about.
Not surprisingly, the soft drink industries are fighting back and attempting to appeal this tax. The litigation involved in this case has made its way to the Supreme Court in an attempt to stop this tax and the affects that have already been seen from it. Supporters of the tax are calling the appeal disappointing and feel that it takes the focus away from the benefits they believe this tax will have for everyone involved in the long run. The outcome remains to be seen as the two sides continue to struggle and those who can travel continue driving to more distant locations to purchase their soft drinks at a lower price.
Who is Karl Heideck?
Karl Heideck is a successful and dedicated Philadelphia attorney with many years of experience in risk management and compliance related issues. A member of the Hire Council since 2015, Karl Heideck provides personal consulting for both large and small businesses on the topics of compliance, product liability, and risk management. In addition to being a successful lawyer and personal advisor, Karl Heideck also operates an educational blog designed to inform the public on topics relating to changes in public policy and other legal news that affects Philadelphia area residents.
Karl Heideck earned his undergraduate degree from Swarthmore College in 2003 and went on to earn a law degree from Temple University in 2009. For over a decade, he has filled important roles within the legal field and continues to provide his expertise to helping area business owners and residents.
More Articles by Karl Heideck:
Karl Heideck’s Guide to Pennsylvania Employment Law for Small Businesses