Soda Taxes

Was Philadelphia's Soda Tax the Result of a Union-Versus-Union Political Fight?

Indicted union boss John "Johnny Doc" Dougherty ordered the soda tax passed to hurt the city's Teamsters union, federal prosecutors say.

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Richard B. Levine/Newscom

Officially, Philadelphia's much loathed soda tax—the highest such tax in the country—was approved as a way to generate revenue for the city's new pre-K program.

Unofficially, like all vice taxes, it was intended to reduce Philadelphians' consumption of sugary beverages—though it has mostly just changed where people buy soda and hasn't improved public health at all.

But now there's a third possible explanation for the soda tax, and it's downright crazy: a political hit job executed by one of the city's most powerful union bosses against a rival union.

That's the theory starting to emerge in the wake of a federal indictment against John "Johnny Doc" Dougherty, the longtime business manager of the International Brotherhood of Electrical Workers Local 98 and one of—if not the—most powerful political operators in the city.

According to federal prosecutors, Dougherty pressed allies on the city council—including Councilman Bobby Henon, who is also charged as part of the 116-count indictment—to pass the soda tax as retribution against the city's Teamsters union, which had disagreed with IBEW Local 98 about which candidate to support during the city's 2015 mayoral election. Dougherty's preferred candidate, now-Mayor Jim Kenney, won that race.

In May 2015, according to the indictment, Dougherty was already planning to strike back at the Teamsters.

"Let me tell you what Bobby Henon's going to do," Dougherty told an unnamed IBEW Local 98 union official, according to the indictment. "They're going to start to put a tax on soda again, and that will cost the Teamsters 100 jobs in Philly."

Indeed, the Teamsters have opposed the soda tax since it was proposed in 2016—shortly after Kenney took office—and say the tax has cost jobs in Philadelphia.

Kenney tells Philly.com that he didn't know the soda tax was a revenge plot hatched by Local 98—though the paper wryly notes that the mayor "has known Dougherty since childhood, attended high school with him, and came up through the trenches in the city's political wars" with the IBEW union boss as his patron. Henon, who pushed the soda tax through the city council, is charged with having accepted more than $84,000 in cash and gifts from Local 98 in order to do the union's bidding on the city council.

Everyone involved is innocent until proven guilty, of course, but these new revelations about the possible origins of the Philly soda tax are likely to increase public opposition to the already-unpopular levy that adds 1.5 cents to every ounce of soda sold in the city.

By nearly every measure, the soda tax is a failure. The tax has been blamed for the closing of at least one grocery store, and has cost supermarkets about $80,000 a month per store in lost beverage sales. Another study found that soda sales outside city limits increased by 38 percent in the months after the tax passed. Philadelphia's poorest residents are most hurt by the tax, and are less likely to be able to dodge it by shopping in the suburbs. To top it all off, the tax produced about 15 percent less revenue than expected.

"The tax does not lead to a shift in consumption towards healthier products, it affects low income households more severely, and it is limited in its ability to raise revenue," concluded a recent study by three University of Minnesota researchers.

It's also a good warning about how well-intentioned but intrusive government policies can be co-opted by corrupt political forces. Even if you believe that soda taxes are good policy—because they nudge people to make healthier choices, or because pre-K needs funding and this is the best way to do it, or whatever—the idea that everyone in Philadelphia is getting taxed only because one politically powerful union wanted to kneecap another should give you pause. What happens when the next policy you want passed pisses off that union?

Union thuggery in Philadelphia politics is pretty common, but it's also costly. Before the soda tax, the best example was probably the construction of the Comcast Tower, a 57-story skyscraper built in the mid-2000s. When the local plumbers union objected to developer's plans to use environmentally friendly flush-less urinals in the building, the city required that redundant plumbing be installed in the building anyway—officially, that was to ensure the no-flush urinals could be replaced if they didn't work properly, but the real reason was just to make work for the union.

If federal prosecutors are right that Dougherty ordered the soda tax to be created as a political hit, there should be no remaining doubt that the tax ought to be repealed. In the meantime, Philadelphians are left to play their small part in another of the city's endless union-on-union civil wars, 1.5 cents per ounce at a time.

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22 responses to “Was Philadelphia's Soda Tax the Result of a Union-Versus-Union Political Fight?

  1. Its funny that this reveals they all know the actual effect of these policies, to hurt people and cost jobs.. but we still have to put up with the dog and pony show that this is beneficial.

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  3. Oh please. How much political power could a mob union boss have?

  4. Intrusive government and corrupt politics as 3D chess. Cool.

  5. So does the increased, but lower than expected, soda tax offset the reduced sales tax from those now shopping outside city limits? Didn’t think so.

    Can we just throw the soda into the harbor?

  6. I never considered this possibility, but a union infight makes a lot of sense. The facts never stacked up for the tax working; decreased consumption would make the city miss its revenue targets. The two conditions of the tax (improved public health and increased tax revenue) are mutually exclusive. All the hubbub was a sideshow to distract us. Now that I think about it, I remember the FBI raiding IBEW and Dougherty’s house just a few months after the bill passed. Really makes me think.

    1. “The two conditions of the tax (improved public health and increased tax revenue) are mutually exclusive.

      Same can be said about pretty much every sin tax.

  7. Corruption is so routine and expected in Philly that it would be a shock if there wasn’t some story like this behind the tax.

  8. Well I’m shocked to find that the electricians union is involved in such things! SHOCKED!!!

    1. I see what you did there.

  9. We need to give the Filthadelphia city government more power so that it can combat things like this.

    1. Filthacrapia has upgraded to Filthadephia? Do I detect a softening of your heart towards the blighted land?

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  10. I’m presuming the poorest Philadelphians weren’t affected at all if they’re covered by SNAP. When they tried to implement a soda tax in Cook county they weren’t allowed to tax soda purchased with SNAP. That and a very big political revolt brought an end to the soda tax.
    Now why soda is covered by SNAP is another matter. I blame soft drink CEO mobsters and their enormous influence over congre$$.

  11. Right. It makes you wonder what Rebublicans like Mitch McConnell are thinking.

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  12. Union corruption in a democrat run city? So was Kenney’s rival less corruptible than him?

  13. Why does the soda tax cost the Teamsters jobs?

    1. Because the delivery drivers for local bottling companies that have the major brands (Coke, Pepsi, Canada Dry, etc) are all Teamsters. Lower sales = less volume = fewer drivers needed.

  14. The insidious nature of the Phila Soda Tax is that it is a tax on distribution, not sales. They framed it that way because Pennsylvania reserves the right to levy sales tax to itself at the state level and does not allow inferior jurisdictions to levy their own sales taxes.

    It’s insidious because naturally the distribution tax is passed along as an increase in the wholesale price, which of course drives up the retail price, which of course increases the amount of sales tax paid.

    The soda tax was marketed by local pols as a way to raise money for Mom-n-Apple-Pie projects such as Pre-K and refurbishing Rec Centers. It’s curious that a pie chart published on Phiily.com (the paywalled web presentation of the Philadelphia Inquirer and Daily News) during the run-up to the Soda Tax is no longer available—this pie chart showed that around 35% of the revenue to be collected would NOT be spent on Pre-K and Rec Centers; rather it would be earmarked to bolster the City’s criminally underfunded pension system. This would seem consistent with City Controller (an independent row office) reports that about 74% of the $137 million collected in the first two full fiscal years + the latest quarter of the tax was just parked, unspent, in the City’s general fund. For Philadelphia pols, $101 million in unspent general fund money brings to mind Mae West’s comments about temptation: “I generally avoid temptation unless I can’t resist it.”

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