Commonwealth Court upholds Philadelphia’s soda tax

Commonwealth Court upholds Philadelphia’s soda tax

Author: Alanna Koll/Wednesday, June 14, 2017/Categories: Philadelphia

After hearing arguments on Philadelphia’s enacted soda tax in Pittsburgh in April, Commonwealth Court ruled Wednesday that the tax is constitutional and not violative of Pennsylvania law.  


The American Beverage Association, The Pennsylvania Food Merchants Association, along with several Philadelphia businesses and consumers filed suit against the tax, which imposes a 1.5 per ounce fee on the distribution of sweetened beverages, stating that it is in violation of the state constitution.  


Attorney’s on behalf of the beverage community argued that the tax violates the Sterling Act, a state law that gives Philadelphia its own taxing authority, but also prohibits the city from taxing anything already taxed by the state.  


Philadelphia City Council and Mayor Kenney’s administration enacted last year to fund projects such as universal pre-K, community schools and a project to rebuild the city’s libraries, parks and community centers.  


Collections under the tax began earlier this year. 


Commonwealth Court judges ruled in favor of the tax, with five judges in support and two dissenting. Judge Michael H. Wojcik wrote the court’s opinion, saying that the majority believes the tax does not violate the state’s uniformity clause and sides with a Common Pleas Court ruling against the beverage community’s arguments on the tax made in December.   


Judge Anne E. Covey, however, in her dissenting opinion wrote, “Contrary to the Majority’s conclusion that the PBT is a ‘distribution’ tax, the PBT is a tax imposed only where the sugar-sweetened beverage is sold or intended to be sold at retail, and the PBT is imposed regardless of whether there is a distributor involved.” 

 

Judge Renee Cohn Jubelirer joined in Covey’s dissenting opinion.  


Philadelphia Mayor Jim Kenney expressed his support for the ruling, stating that now that two courts have considered the arguments, the PBT “stands on solid legal grounds.”  


“As I stated when the beverage tax was upheld in Common Pleas Court, the children of Philadelphia are waiting for the opportunities that the tax can provide,” wrote Kenney in a statement. “Our entire city desperately needs us to be able to move forward with the programs funded by the tax and we will be unable to do that in full until full legal action is resolved.”  


City Solicitor Sozi Pedro Tulante said “we appreciate the judges’ exhaustive examination of the matter, and urge plaintiffs to set aside a legal action that now has been soundly rejected by two courts.”  


In regards to the ruling, Shanin Specter, a partner with Kline & Specter, the firm representing the beverage community, had a brief comment: “We will appeal.”  


No further plans were laid out.  


In its first two month of collections, the tax has exceeded its estimated revenue amounts, bringing-in $12.3 million. It is anticipated to bring in an estimated $91 million in its first year, and $410 million over the next five years.  


According to a recent reportshowever, the tax has recently been producing declining revenues and the city administration is anticipating reducing its projections for fiscal year 2017 when it presents a revised five-year plan later this month. 

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