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Beverage Lobby's New Weapon in the War Against Soda Taxes: Cold Hard Cash

[***UPDATE: In March 2011, the beverage industry followed through on its cash offer and donated $10 million in a three-year grant to the Children's Hospital of Philadelphia. The money went through its Foundation for a Healthy America, not Pew.]

In its bid to kill a soda tax proposal under consideration in Philadelphia, the beverage industry has dangled a particularly generous offer in front of the mayor and members of the city council -- deep-six the tax and we'll give you $10 million.

Councilman Frank DiCicco said that soda lobbyists have offered to give $10 million over two years to the Philadelphia-based Pew Charitable Trusts to fund health and wellness initiatives for the city. That is, if Pew, which isn't in the habit of teaming up with industry, would even want the money. In an emailed statement, Rebecca Rimel, Pew's president, said: "Given that the proposed tax on sugary drinks is an active issue before the City Council, it is inappropriate for The Pew Charitable Trusts to comment or play a role."

The move, which some might recognize as a bribe, demonstrates just how much the soda industry fears any attempt to tax its product. Whenever a cash-strapped state or municipality floats the idea of a tax on sugar-sweetened beverages, the American Beverage Association, which is leading the fight, marshals small armies of local support -- bottling company executives and their employees, distributors, convenience store owners and even the Teamsters, who drive the trucks full of Coke and Pepsi.

One public hearing in Philadelphia last month featured a line-up of nine speakers from the Philadelphia Coca-Cola Bottling Company, the Pepsi Bottling Group and others who would stand to lose financially if a soda tax went through.

The fight in Philadelphia has been particularly rancorous because Mayor Michael Nutter had originally proposed a 2 cents per ounce tax on all sugar sweetened beverages, which would make it the highest in the nation.
The measure, which Nutter has since knocked down to 1/2 cent per ounce, failed in a preliminary budget vote last Thursday, but there's still a chance, though slim, that it could be included in a final vote later this week. It's unclear what role the ABA's promise of millions of dollars played in swaying council members to vote against the tax.

On some level, the $10 million offer is an attempt to call the mayor's bluff. The ABA maintains that, despite the rhetoric of elected officials about wanting to curb obesity, soda taxes are all about filling up public coffers. Larry Young, CEO of Dr. Pepper Snapple (DPS) and chairman of the ABA, told analysts at a Goldman Sachs conference last week, "You say it's for obesity. Come on, it's to fill a budget deficit."

And in fact, Nutter was hoping the tax would raise $77 million to help plug a $150 million gap in the fiscal year that begins July 1. But $20 million of that -- double the ABA's donation -- would go to obesity prevention programs.
Image by Eugene Pivovarov at Wikimedia Commons

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