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Philadelphia mayor looks to fund pre-K with controversial soda tax — by the ounce

May 24, 2016 at 6:35 PM EDT
When other cities have proposed a tax on sugary soft drinks, it’s often sold as a plan to fight obesity. Not in Philadelphia, where a battle is brewing over the mayor’s 3 cents-per-ounce tax plan that would be used to fund citywide pre-K. The beverage industry opposes the tax and argues that if you’re going to tax them, then why not cakes and candy? Hari Sreenivasan reports.

HARI SREENIVASAN: But first: The city of Philadelphia is considering a new, but controversial way of funding early education.

Here’s my report, part of our weekly series on education that airs on Tuesday nights called Making the Grade.

In Philadelphia, buying soda has bubbled into a political controversy. To make pre-kindergarten available to all 3- and 4-year-olds, Philadelphia’s mayor has proposed a soda tax that requires beverage distributors to pay 3 cents for every ounce of sugary drink sold in the city.

NARRATOR: Philadelphia’s chance to help lift our children with citywide pre-K is now.

HARI SREENIVASAN: The mayor hopes to raise $95 million every year with the new tax. But unlike campaigns in other cities, Philadelphia’s soda tax is not being promoted as a health issue.

MAYOR JIM KENNEY (D), Philadelphia: The ancillary benefit to this will be healthy choices, but it’s not the purpose. The purpose of imposing this 3-cents-an-ounce sugar-sweetened beverage tax is to allow people to get their kids educated and move them out of poverty into taxpaying citizens.

HARI SREENIVASAN: Mayor Jim Kenney argues beverage companies make big money from sugary drinks sold in low-income neighborhoods, places where pre-kindergarten can make a difference.

JIM KENNEY: Unless a child is reading at grade level by third grade, the odds are by seventh and eighth grade, they will be acting up because they can’t read. Ninth and 10th grade, they’re dropping out because they’re embarrassed they can’t read.

HARI SREENIVASAN: But the high-calorie tax has become a highly charged debate.

NARRATOR: When those pennies start adding up, your grocery budget is going to go…

HARI SREENIVASAN: Much of the opposition is funded by the American Beverage Association, but some is from city grocers who rely on sodas sales.

Dany Vinas owns a grocery store in north Philadelphia. He says 25 percent of his business is selling sugary drinks.

DANY VINAS, Grocery Store Owner: They’re going to tax the big company. They’re going to pass it onto us, and who is going to be paying? The consumer. At the very end, whoever buys it to consume, that’s who is going to pay.

KEVIN EADS, Customer: You like this juice? All right, get it.

HARI SREENIVASAN: Kevin Eads and his family shop at Vinas’ store every day.

KEVIN EADS: I drink soda and juice all day. I love it.

HARI SREENIVASAN: Eads says if the cost is passed on to the consumer, he will have trouble paying for the sugar-based juice his children drink.

KEVIN EADS: It’s not really going to be fair on them, because I’m going to be — I’m not going to have the money to buy it. I barely have enough to get what I’m getting. I’m going to have to choose between either getting food or getting juice, you know, and that’s not right.

DANY VINAS: How can you tell a 3-year-old kid drink water, drink diet soda, when they know that those sweet drinks is what they want? They’re going to say no, no, no. And the parent will have to buy it.

CARLA HURLEY, Soda Tax Supporter: Fold it if you need to.

HARI SREENIVASAN: Carla Hurley and her husband, Cameron, who grew up in North Philadelphia, support the soda tax.

CARLA HURLEY: It really makes sense to me that, OK, sugary drinks, it’s not something that we need. It’s something that we want.

HARI SREENIVASAN: Their 4-year-old son, Chance, would qualify for the free pre-kindergarten the tax would provide. Currently, the Hurleys pay $1,000 a month.

CARLA HURLEY: My job pretty much pays for child care, but, at this point, developmentally, they would benefit more from going than from staying home with me.

CAMERON HURLEY, Soda Tax Supporter: The money that she brings in, the net, is really close per pay to the money that goes out for day care. It’s really close.

HARI SREENIVASAN: The couple has moved in with Carla’s mother until they can afford to buy a House.

CARLA HURLEY: That’s a mortgage payment for us, so that would be amazing to at least take some of that burden off us from paying for two kids for child care. It would be great.

HARI SREENIVASAN: The mayor says the soda tax would expand high-quality preschools, like the Parent Infant Center in West Philadelphia, where the wait-list is substantial.

DEB GREEN, Executive Director, Parent Infant Center: This is part of an advocacy effort to get the children to deliver messages to members of City Council to understand the importance of the sugar tax right now.

HARI SREENIVASAN: Executive director Deb Green shows drawings the students created in support of the tax, describing what they liked most about pre-kindergarten.

DEB GREEN: This one says, “Because the playground is so much fun to play on.” This child loves the blocks.

HARI SREENIVASAN: The center serves both low-income families who receive state subsidies and full-paying families.

DEB GREEN: I think we’re learning the importance of children being in classrooms with children of other races. When they learn it at 3, 4, and 5, they no longer have bias, stereotypes, prejudice.

HARI SREENIVASAN: Currently, 150 families are waiting for full-pay slots and 70 families are waiting for subsidized slots.

Store owner Vinas supports funding pre-kindergarten, but says the city should find another way to pay for it. Vinas worries the added cost, which he says could double the price of some beverages, will drive his customers outside the city to buy tax-free soda.

DANY VINAS: Most of the people, they’re going to just drive away, and drive 10 minutes, and do the whole shopping at another supermarket out of the county of Philadelphia.

JIM KENNEY: We’re not taxing thirst. It’s kind of comical, their argument that this product is so critical to your life and your happiness, that you’re going to go and stock up your whole car with it. It’s just — it’s kind of laughable.

DAVID DAY, Owner, Day’s Beverages: When the next trailer comes in, make sure it’s all orange.

HARI SREENIVASAN: But David Day of Day’s Beverages an independent soft drink company on the border of Philadelphia, believes the tax has bigger implications than any losses he may incur. For him, it’s an issue of fairness.

DAVID DAY: Many products have sugar. Cakes, all your candy bars have sugar. Your cereal has sugar. If you’re going to do it, let’s do everything that has sugar will be taxed, proportionately. Let’s be fair. You just cannot pick on soft drinks.

HARI SREENIVASAN: The City Council is expected to vote on the mayor’s proposal soon.