Philly Soda Tax Upheld by Commonwealth Court

It's the second major legal win for the city since the American Beverage Association filed a lawsuit against the tax this past September.

soda tax NoDerog

Pennsylvania Commonwealth Court voted today to uphold Philadelphia’s soda tax.

It’s the second legal win for the city since the American Beverage Association and local retailers filed a lawsuit against the 1.5-cents-per-ounce tax on sweetened beverages in September, claiming the levy is illegal because it effectively causes double taxation.

The tax was first upheld by a Common Pleas Court judge who dismissed the ABA’s lawsuit in December. The ABA appealed, but Commonwealth Court judges voted 5-2 vote to uphold the lower court’s decision.

Mayor Jim Kenney released a statement shortly after today’s decision:

“Two courts have now considered the arguments of the beverage industry and both are certain that the Philadelphia Beverage Tax 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. 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. The beverage industry needs to see this ruling for what it is – a clear statement Philadelphia has the right to try to provide for its own – and cease the legal and public relations battle to which it has devoted millions. The beverage industry should not ask our children to wait another minute.”

In their lawsuit and appeal, the ABA and several businesses claimed that though the soda tax is levied against distributors, consumers effectively bear the brunt through expenses passed on by distributors. This essentially causes double taxation, they argued, because soft drinks are already subject to the Pennsylvania sales tax.

But the Commonwealth Court found that the “post-tax economic actions of private actors” in response to the tax was not enough to deem it unjust or illegal, according to an opinion written by Commonwealth Court Judge Michael Wojcik.

Still, the ruling doesn’t conclude the soda tax war. The ABA and local businesses could appeal the judge’s decision (yet again) to the state’s Supreme Court.

In a statement, City Solicitor Sozi Pedro Tulante said he urges “plaintiffs to set aside a legal action that now has been soundly rejected by two courts.”

The soda tax was passed in June of 2016 to help fund pre-K, community schools, park and recreation systems and the city’s fund balance.

Follow @ClaireSasko on Twitter.