Soft drinks, hard lobbying

Opponents of a proposed Philadelphia soda tax in 2011, when Michael Nutter was mayor, included union members who protested outside City Hall.
Opponents of a proposed Philadelphia soda tax in 2011, when Michael Nutter was mayor, included union members who protested outside City Hall. (MATT ROURKE / Associated Press, File)
Posted: March 07, 2016

Five years ago, when City Council last considered a soda tax, City Hall's corridors swelled with lobbyists bent on stopping it cold.

Representatives of the beverage industry, grocery store owners, and interested unions all but camped out in Council offices, ready to hector members that the levy would kill jobs and unfairly burden the poor.

The beverage industry was liberal in its spending, dropping big bucks on advertisements and outreach.

"In one word? Intense," said Councilman Curtis Jones Jr. "I've been through some giant public policy issues - school funding, hotels, paid sick leave. All of them pale in comparison to soda tax."

With Mayor Kenney pursuing his own sugary drinks tax, the war is resuming. The hallways could be more crowded this time, as the stakes are even higher.

Kenney is proposing a three-cents-per-ounce tax, which exceeds by a penny the levy his predecessor, Michael Nutter, twice failed to persuade Council to pass.

The tax would bring in an estimated $400 million over five years. It would apply to any beverage with added sugar, including sports drinks and sweetened teas. Diet drinks or those to which sugar is added at a customer's request, such as coffees and teas, would not be taxed.

Kenney is selling the tax by pitching what the revenue would pay for: universal prekindergarten, park and recreation center improvements, a jobs program, community schools, and an investment in the struggling pension fund.

"It's not so outrageous," Kenney said after his budget address Thursday. "If you agree with us, acknowledge the efficacy of doing these five things and how important they are. . . . Have an open mind about funding."

Standing in opposition will be the American Beverage Association as well as numerous small local businesses and the Teamsters union, which represents 1,400 beverage industry workers.

In 2011, that coalition called itself "Philly Jobs, Not Taxes." This year, to make the levy sound even more onerous, opponents have labeled it a "grocery tax."

Even when no tax was on the table, the beverage industry has been a reliable source of campaign contributions for Council members.

The industry gave more than $96,000 to Council candidates in 2014 and 2015. That's not quite as much as it contributed in the two years before the 2011 elections, when Nutter was actively pursuing the levy, but it is still a sizable pot.

About half that money has come from Harold and Lynne Honickman and their children, who own the Honickman group of companies, one of the largest soda distributors in the mid-Atlantic region. Their Pepsi and Canada Dry bottling operations in New Jersey provide nearly 20 percent of the city's soft drinks.

Harold and Lynne Honickman are philanthropists who also count among their interests gun control and the arts.

In 2014 and 2015, the Honickman family gave more than $50,000 to 15 Council candidates, all but one of whom are currently members of the body.

Also swelling Council members coffers has been the Liberty Bell Beverage PAC (a state political committee funded by PepsiCo Inc., Coca-Cola's PAC, and the state beverage association) and the Teamsters.

Notably absent from City Hall in recent years has been the American Beverage Association. After the 2011 soda fight, the association poured $400,000 into lobbying in 2012. But then its spending dried up. The association was not even a registered lobbyist in Philadelphia in 2015.

On Monday, three days after news of Kenney's tax proposal broke, the association renewed its registration.

"We're giving voice to the people opposed to taxes on grocery items and educating them about the proposal," Lauren Kane, spokeswoman for the association, said. "These taxes are wildly unpopular and discriminatory."

Nationwide, the beverage industry has a near-perfect record defeating similar taxes. From San Francisco to New York, sugary drink taxes have failed. Only Berkeley, Calif., has succeeded.

Marlene Schwartz, director of the Rudd Center for Food Policy and Obesity, said the soda industry was "terrified" of what a tax could do to profits.

"If they didn't really think it was going to hurt their sales," she said, "then why would they be fighting so hard?"

Soda companies are already dealing with a sharp decline in sales. Nearly two-thirds of Americans say they avoid soda in their diet, according to a 2014 Gallup poll.

Philadelphia is no exception. From 2007 to 2013, the number of high schoolers here who said they drank one or more sodas per day decreased from 31 percent to 24 percent.

For Council members considering the tax, the most effective arguments could be that such taxes hurt jobs and disproportionately affect minorities.

"I'm not only representing my members, whose jobs are at stake," said Daniel Grace, secretary of Teamsters Local 830. "I'm representing low-income single mothers, welfare recipients, everybody this tax is an unfair burden on."

To combat those arguments, Kenney is trying to unite his own diverse coalition of community leaders, like Rodney Muhammad of the NAACP, who says he supports the tax because of the opportunities prekindergarten gives to children.

Kenney's best pitch for the tax is that the revenue it would provide would guarantee access to prekindergarten for all Philadelphia children.

At a community meeting last month, Anne Gemmell, Kenney's director of prekindergarten, implored a crowd of pre-K providers in Hunting Park to show their support by posting on Facebook and calling Council members.

"I need your help," Gemmell told the packed room. "This is not a done deal. This is just a vision until we secure money from City Council. We can't do this with billboards or ads, we're counting on folks like you."

jterruso@phillynews.com

215-854-5506@juliaterruso

Staff writer Claudia Vargas contributed to this article.

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