by Laura McCrystal
May 15, 2018
The Pennsylvania Supreme Court will hear arguments Tuesday morning in a case challenging Philadelphia’s tax on soda and other sweetened beverages.
Because Philadelphia was the first major U.S. city to pass a tax on sweetened beverages, the outcome of the case and the fate of the controversial levy will been closely watched by other cities across the country.
Justices will consider whether the 1.5-cent-per-ounce levy on the distribution of sweetened beverages amounts to double taxation. State law does not allow the city to tax an item that is already taxed by the state. The tax is levied on beverage distributors, but its opponents argue that it has been passed through to consumers who already pay sales tax.
The tax has withstood legal challenges to date; a lawsuit was dismissed before the tax went into effect and the Commonwealth Court upheld the tax last year.
A group of local businesses, consumers, and trade associations — including the American Beverage Association, appealed the Commonwealth Court decision to the state’s highest court. The Supreme Court announced in January that it would hear the appeal.
Since the beverage tax went into effect at the start of 2017, it has raised more than $96 million, including nearly $18 million so far this calendar year, according to data provided Monday by the city.
City officials have said some spending for programs the tax is funding — pre-K, community schools, and an initiative to improve parks, libraries, and recreation centers — has been delayed while the litigation works its way through the court system.
Mayor Kenney’s administration also announced in March that it would downsize plans for the programs the tax funds because it had not raised as much revenue as was initially predicted. The adjustments renewed criticism of the tax, which opponents say hurts local businesses and is unsustainable. But city officials have maintained that it is still providing children with much-needed city programs.
Arguments before the Supreme Court are scheduled to begin at 9:30 a.m.
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