The obesity rate in America is soaring, which is causing public officials to worry about the consequences on society. Nearly 70 percent of American adults have excess weight to lose. Approximately 35 percent of the population is obese. Unfortunately, the obesity rate is even starting to impact three-year-old children.
The obesity epidemic is straining many areas of life. For example, high obesity rates are affecting the healthcare system. Each year, the government spends millions of taxpayer dollars on issues stemming from obesity. It is obvious that America needs to solve this obesity issue. With that said, there are no clear solutions available.
Some states and cities are attempting to offset obesity costs by creating extra taxes and penalties. For example, certain areas are starting to tax junk food and soda at a higher rate. Philadelphia instituted a soda tax in hopes that it helps lower the obesity rate. If the product costs more to buy, people may spend their money on a healthier, cheaper option.
How Does the Philadelphia Soda Tax Work?
Philadelphia was one of the first cities in America to place extra tax on soda. The tax went into full effect in the beginning of 2017. Consumers must pay a 1.5 cents sales tax for each ounce of soft drink that they purchase. Public officials hope this extra cost will encourage people to consume healthier drinks that are less expensive. The tax also helps offset the costs of treating patients who regularly consume these sugary beverages.
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The Philadelphia Soda Tax’s Impact on Society
Public officials created the soda tax with good intentions, but the tax is interfering with society in ways they did not expect. For example, the tax places a burden on low-income citizens. It turns out that low-income residents are the biggest consumers of soda. Those who have more income can simply pay the extra tax without worry. They can also drive to a nearby town that does not charge the extra tax. Most low-income residents do not have the transportation needed to leave the city.
The tax is also harming local mom and pop stores. These stores already have to compete with big chain grocery stores that have more capital and a big advertising budget. Local mom and pop shops are seeing a reduction in sales due to the soda tax. Customers are traveling outside the city to do their shopping so that they can avoid paying higher fees. As a result, many mom and pop shops may end up going out of business. In a two-month period, one large retailer experienced a 20 percent increase in sales. In that same period, a small business owner suffered a 30 percent loss of revenue. The soda tax may end up leading to the death of mom and pop shops in Philadelphia.
According to financial advisors, the well-intended soda tax is going to create a multi-million dollar deficit in Philadelphia. For example, one financial advisor expects the city to suffer both short and long-term deficits due to city officials incorrectly calculating the numbers. The soda tax is going to hurt the city’s overall budget. City officials will have to make up the budget deficit by cutting costs in another area.
How is the Soft Drink Industry Fighting Back?
The Philadelphia soda tax negatively affected the soda industry. For example, Canada Dry and Pepsi both had to lay off nearly 20 percent of their employees in the Philadelphia region. As expected, the soft drink industry is fighting back in hopes of having the soda tax repealed. In fact, the Supreme Court is already planning to hear litigation from this case.
Two different lower courts ruled in favor of the tax. The Pennsylvania Commonwealth Court and the Philadelphia County Court of Common Pleas both ruled that the soda tax is legal. The beverage industry is not satisfied with these verdicts, which is why they are taking the case all the way to the Supreme Court. According to industry lawyers, the lower court rulings did not match the precedent set in higher court. Whenever the Supreme Court reaches a verdict, it will have lasting effects throughout the country. Some cities are waiting to hear the Supreme Court’s decision before they implement a soda tax of their own.
Philadelphia soda tax supporters are disappointed about the appeal. They feel that the soda industry is trying to keep people from knowing what benefits the tax can offer. Both sides are trying to control public opinion. It is unclear how the Supreme Court will rule on this case. In the meantime, residents who own a vehicle are continuing to travel outside the city to purchase soft drinks and other groceries.
Who is Karl Heideck?
Karl Heideck is an attorney in Philadelphia who specializes in litigation, compliance and risk management review. He has been practicing law in Philadelphia for more than a decade. His two areas of focus are employment and corporate law. Karl Heideck started his journey by earning an undergraduate degree at Swarthmore College in 2003. From there, he attended law school at Temple University and graduated in 2009.
Besides practicing law, Karl Heideck is also a prolific writer. Ten years in the legal field has helped him become a skilled legal writer and researcher. He enjoys keeping up with contemporary legal developments and runs an educational blog to help people stay informed. Karl Heideck can help area business owners and residents on any topic that relates to compliance, risk management and product liability.
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