Philadelphia City Council introduces bill to phase out, potentially eliminate soda tax

City Council introduced legislation Thursday that could significantly amend and potentially eliminate the controversial sweetened-beverage tax.

A bill sponsored by Councilwoman Maria Quiñones-Sánchez and six colleagues would allow Council to ramp down certain aspects of the tax beginning in 2020, from the rate — currently at 1.5 cents per fluid ounce — to what beverages are included in it. As written, it does not specify what those changes might be.

“The majority of Council really believes that because of the public debate about how consumers are feeling over the over-inflated prices, there are concerns how it impacts businesses. Not only supermarkets but small businesses,” Quinones-Sanchez said. “Are there any unintended consequences we need to pull back so we don’t hurt the most vulnerable constituents?”

A resolution accompanying the bill would allow Council to hire a consultant to research the sweetened-beverage tax’s economic impact as well as offer alternative funding methods to inform changes. The only specific alternative mentioned in the resolution is a fee on single-use plastic bags.

Councilman Mark Squilla, who has said he wants to introduce a bag fee this year, is a cosponsor of the study resolution but not the bill, which calls for more direct changes to the law.

The beverage tax is Kenney’s signature legislation, used to fund pre-K, community schools, and improvements to parks, libraries, and recreation centers. The mayor said Thursday he was blindsided by the bill’s introduction and “very disappointed” in the members who had sponsored it.

“Anyone who tells you there is money somewhere, whether they’re a current member of the Council or a challenger, ... it’s not there,” he said. “This is my 29th budget and I can assure you that if the beverage tax goes away, pre-K goes away, community schools goes away, and a $500 million investment in parks and recreation centers goes away. Sometimes I think our PHL pre-K kids have more sense than some of our council members.”

Some of the council members who are supporting the new legislation said they hope the study finds alternative revenues so that the programs are not lost. Councilwoman Cindy Bass, who has 200 pre-K seats in her district and supported passage of the tax, said she wants a more sustainable revenue source since the tax has brought in about 1 percent less each year.

“I don’t want to do anything that’s going to take away universal pre-K or Rebuild, but at the same time if there is a better way to do it, I think we ought to look at it,” Bass said.

Quiñones-Sánchez, who opposed the soda tax, had support from all three Republicans on Council — Brian O’Neill, David Oh, and Al Taubenberger — as well as Democrats Bass, Blondell Reynolds Brown, and Allan Domb. All three Democrats voted in favor of passing the beverage tax.

Council would need only two more votes (nine) to pass a bill amending the sweetened-beverage tax, though it’s unclear what those amendments would be and how Council would vote on them. Kenney said Thursday he would veto any legislation that cut the revenue generated by the beverage tax. Council would need 12 votes to override a veto.

Ten members cosponsored the resolution to study the tax.

The legislation was introduced the same day that a ShopRite closed after operating for 30 years in West Philadelphia. Its owner, Jeff Brown, blamed lost income due to the levy.

The Kenney administration pushed back on that narrative, saying the Commerce Department was in “final negotiations” with the owner of the building to bring in a new chain grocery store.

The administration was also quick to provide numbers on what a plastic-bag fee might bring in since it was mentioned in Council’s study resolution. When analyzed in 2016, it was estimated a plastic-bag fee of 5 cents per bag would generate $7.6 million per year, with retailers keeping a little less than half and about $4.6 million going to the city, the administration said. The beverage tax is projected to bring in $75.9 million in fiscal 2020.

While the legislation leaves the door open to changes, there’s no doubt about what its sponsor wants. “I would be up for a total repeal of it,” Quiñones-Sánchez said. “I’m against a regressive tax. ... What the polls are showing is that people aren’t happy with this."

The bill is the first legislative challenge to the tax, which already has survived several legal assaults. It’s unlikely Council would actually take a vote to alter the tax before the primary election May 21, though, since any study that members vote to conduct would likely take months.

The tax was already expected to be a major campaign issue leading up to the primary election for mayor and City Council. So the proposed legislation is sure to trigger even more debate among supporters and critics. The issue is bubbling up in the mayor’s race with Kenney’s two Democratic primary opponents, former City Controller Alan Butkovitz and State Sen. Anthony H. Williams, attacking the tax. Insiders expect the beverage industry will fund some of the many Council candidates.

Kenney had harsh words for those members of Council supporting potential changes to the tax, saying they were "putting the needs of their campaigns ahead of the needs of our children. There’s an election coming and the beverage guys are writing big checks,” he said.

The Ax the Bev Tax Coalition, a group of businesses, applauded Council.

“We appreciate that these councilmembers recognize that the beverage tax is a harmful policy," said spokesperson Anthony Campisi. “However, we don’t need a study to know that the tax hurts working families across Philadelphia and should be repealed."

Staff writers Laura McCrystal and Jason Laughlin contributed to this article.