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Sugar And Spite: Big Cities Taxes On Beverages Irking Big Soda

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Sugar And Spite: Big Cities Taxes On Beverages Irking Big Soda
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How sweet it isn’t to be hated by you.

Chicago, Philadelphia and, soon, Seattle and San Francisco are just a few of the cities taxing soda pop as both a health threat and source of revenue, and the beverage industry says the cash municipalities are making on non-carbonated quaffs is costing jobs and retail revenues.

Like a game of whack-a-mole, studies are showing that people are merely driving outside the city limits to get their soda fix, according to industry journal Food Dive.

“Soda purchases are down 55% in the (Philadelphia) city limits, but are up 38% just outside the city's border,” it said. The source was Catalina, a marketing company that studied 109 million purchases in the Philadelphia area. A total of 121 stores were checked within the city limits and several hundred outside.

Sports Drinks Also On Some Cities’ Hit List

Philadelphia put in a 1.5-cent-per-ounce tax on sugary beverages at the start of the year. It also covers fountain sodas, as well as some sports drinks and other beverages that proponents of the tax say leads to a costly epidemic of obesity that costs the country hundreds of billions of dollars a year.

“Obesity has continued to rise. Soda consumption is at a 31-year low,” countered Lauren Kane, senior communications director for the American Beverage Association, which represents bottlers and non-alcoholic beverage giants such as Dr Pepper Snapple Group Inc. (NYSE: DPS), PepsiCo, Inc. (NYSE: PEP) and The Coca-Cola Co (NYSE: KO).

“At the end of the day, these are money grabs,” she said.

Kane argues that the taxes target lower-income people who may not have the transportation to travel to the suburbs to buy, say, a six-pack of Mountain Dew.

The Shelby Report, a grocery journal, said Pepsi laid off about 100 distribution center workers in the Philly area, and layoffs have been reported elsewhere. Kane said the high costs are putting mom-and-pop bodegas out of business.

Chicago Fired Up

Retailers are suing Chicago’s Cook County over their penny-an-ounce tax that passed earlier this month. Cook County board president Toni Preckwinkle has an ally in former New York City mayor Michael Bloomberg, the media mogul who reportedly spent $2 million to lobby for the law locally.

Forbes says the man behind Bloomberg News spent $18 million on advertising for initiatives in Oakland and San Francisco alone.

“If you want good government you have to pay for it,” Preckwinkle said. ““We picked a revenue source that has positive health benefits.”

Is the money going for a good cause? Not according to the Tax Foundation, which notes that Philly’s tax has raised the price of soda even higher than the average for beer and generated far less revenue than anticipated.

Sodaless In Seattle

Before the most-recent election season, only Berkeley, California, had passed a sugar-sweetened beverage tax, which took effect in 2015 and has significantly suppressed sales there. Referendums passed last fall in San Francisco, Oakland and Albany, California, and Boulder, Colorado. The beverage industry won prevailed only in Santa Fe, New Mexico.

The San Francisco and Seattle soda restrictions —which, unlike Philly, don’t also target diet colas — go into effect the first of next year. Already there are lawsuits seeking to stop a burgeoning trend.

Related Link: A Sticky Situation

Posted-In: American Beverage AssociationNews Health Care Commodities Politics Legal Markets General Best of Benzinga

 

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