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What does a soda tax look like?

The folks over at have posted a PDF of Philadelphia’s proposed soda tax law. You can check out the official document here, but I’ve copied the important sections below.

(1) Sugar-sweetened beverage. Any non-alcoholic beverage which lists any form of sugar, including high fructose corn syrup, as a listed ingredient; or which is prepared at the point of sale by mixing water with any syrup which lists any form of sugar, including high fructose corn syrup, as a listed ingredient; except that sugar-sweetened beverages shall not include baby formula. Sugar-sweetened beverages include, but are not limited to, soda; non-100%-fruit drinks; sports drinks; flavored water; energy drinks; and pre-sweetened tea. Sugar-sweetened beverages do not include unsweetened drinks to which a purchaser can add, or can request that a seller add, sugar, at the point of sale.

The Department of Public Health is authorized to promulgate regulations to clarify the inclusion or exclusion of particular products.

§ 19-3602. Imposition and Rate of the Sugar-Sweetened Beverage Tax.

(1) There is hereby imposed a tax on the privilege of selling at retail any sugar-sweetened beverage, including but not limited to sales of pre-packaged beverages, sales of fountain beverages, sales at restaurants, and sales from vending machines.

(2) The rate of tax shall be two cents ($.02) per ounce sold of pre-packaged beverage; and 18 cents ($.18) per ounce of syrup used for sales of fountain drinks; all subject to the following adjustments:

(a) The rate for each calendar year (or such other accounting year allowed by the Department) commencing on or after January 1, 2011, shall be certified by the Department to the Chief Clerk of Council no later than the immediately preceding December 15. The Department shall calculate the rate by multiplying the then-current rate by the CPI Multiplier. The CPI Multiplier shall equal the ratio of the most recently published Consumer Price Index for All Urban Consumers (CPI-U) All Items Index, Philadelphia, Pennsylvania, United States Department of Labor, Bureau of Labor Statistics (“CPI”), on December 15 to the most-recently published CPI on the immediately preceding December 15. The rate shall be expressed in dollars per ounce, rounded to the nearest one-ten-thousandth of a dollar (four decimal places).

A couple thoughts on this:

Two cents per-ounce is a whopper of a tax. It is twice the rate that has been floated in New York and at the national level. If implemented, this tax would add nearly 60 percent to the cost of your typical twelve pack.

The eighteen cent per-ounce tax on soda syrup would almost certainly mean the end of free refills in Philadelphia, as it will increase the cost of the primary ingredient in soda by between 100 and 300 percent (depending on if a restaurant serves brand name or generic soda).

The tax is indexed to inflation. So unlike beer, the tax burden will not decrease over time.

Although it is being sold as a soda tax, it is structured in such a way that it will apply to a wide-range of beverages from juice, to chocolate milk, to energy drinks, to fancy coffee-based beverages.

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