American Beverage Association, along with several Philadelphia residents and
businesses, filed suit against the City of Philadelphia in September, arguing
that the city’s new sugary beverage tax duplicates the state sales tax,
rendering it illegal. A Common Pleas Court judge rejected their arguments and
upheld the tax in December. The decision was appealed to Commonwealth
Court, responsible for appellate cases involving local governments.
Philadelphia’s 1.5-cent-per-ounce tax on sugary beverages funds the
city’s pre-K program and community schools, and helps pay for rebuilding parks
and recreation centers citywide. While the tax is in litigation, the growth of
those programs has been put on pause. And retailers are reporting losses due to
Pennsylvania state law
prohibits Philadelphia from enacting taxes on items or transactions the
commonwealth already taxes. The city’s sugary beverage tax is levied on
distributors who sell and transport beverages to dealers for retail sale.
The question before the
court is whether the soda tax constitutes a “double tax” on consumers because
the cost is passed to them at the register, where they also pay sales tax. The
city contends that the soda tax is not a “double tax” on consumers because the
city’s sugary beverage tax is levied on the beverage distributors and the state
does not tax the distribution of sweetened beverages.
On April 5, seven justices
of the Commonwealth Court in Pittsburg heard arguments from both sides. To
date, the court had not rendered an opinion on the case.
Health advocates in Multnomah County (which includes
Portland, OR) are working to gather the necessary 17,381 signatures from county
voters to add a soda tax on the November
ballot. The measure would add a tax of 1.5-cents-per-ounce on sugary drinks,
including soda, energy drinks and sweetened teas.
Seattle Mayor Ed Murray has
proposed a two-cents-per-ounce tax be imposed on
distributors of sugary drinks that is projected to raise $16 million per year
and would help fund educational programs. To date, the proposed ordinance has
not been introduced to the City Council for consideration.