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Pennsylvania

Pennsylvania Supreme Court upholds Philadelphia soda tax

| Wednesday, July 18, 2018, 5:27 p.m.
A sweetened beverage tax sign is posted by sweetened beverages at a supermarket in the Port Richmond neighborhood of Philadelphia, Wednesday, July 18, 2018. Philadelphia’s tax on soda and other sweetened drinks was upheld Wednesday when the state’s highest court rejected a challenge to the law by merchants and the beverage industry.
A sweetened beverage tax sign is posted by sweetened beverages at a supermarket in the Port Richmond neighborhood of Philadelphia, Wednesday, July 18, 2018. Philadelphia’s tax on soda and other sweetened drinks was upheld Wednesday when the state’s highest court rejected a challenge to the law by merchants and the beverage industry.

PHILADELPHIA — In a victory for Mayor Jim Kenney’s administration, the Pennsylvania Supreme Court on Wednesday upheld Philadelphia’s controversial tax on soda and other sweetened beverages.

In a 4-2 majority opinion, the court found that the city had not violated state law by taxing the distribution of beverages. Opponents of the tax had argued that the levy amounted to double taxation because it is passed down to consumers who already pay sales taxes.

Arguments in the case, heard by the Supreme Court in May, focused on a Depression-era law known as the Sterling Act that allows the city to tax anything not already taxed by the state. Lawyers for a group of local businesses, consumers, and trade associations argued that the city had tried to get around state law by passing a levy on beverage distribution rather than sales.

The Supreme Court disagreed, siding instead with the city.

“The legal incidences of the Philadelphia tax and the Commonwealth’s sales and use tax are different and, accordingly, Sterling Act preemption does not apply,” Chief Justice Thomas G. Saylor wrote in the majority opinion.

The 1.5-cents-per-ounce tax funds Kenney’s signature initiatives to expand pre-K, create community schools, and improve parks, libraries and recreation centers, and the mayor said the ruling will allow those programs to expand and continue. City officials had said that spending for some of those programs was on hold while the case was pending in the court system.

“These programs, funded by the beverage tax, will fuel the aspirations and dreams of those who have waited too long for investments in their communities,” Kenney said in a written statement. “The City of Philadelphia will now proceed expeditiously with our original plans — delayed in whole or part by nearly two years of litigation — to fully ramp up these programs now that the legal challenge has been resolved.”

Shanin Specter, a lawyer who represented the group challenging the tax, said he was disappointed by the decision. Anthony Campisi, a spokesman for the Ax the Philly Bev Tax Coalition, continued to criticize what he called a “wildly unpopular beverage tax.”

“It is now up to our elected officials to listen to the concerns of their constituents and provide Philadelphians much needed relief by reversing this tax,” Campisi said.

City Council President Darrell L. Clarke said he was grateful and relieved that the litigation over the tax has concluded.

“I have always been sympathetic to the Philadelphians most affected by this tax — from small corner store owners to low-income consumers — and I will continue to insist that the economic benefits of the Philadelphia Beverage Tax be invested first and foremost in our most vulnerable communities,” Clarke said in a written statement. “Healthy, educated kids and inviting public spaces will ultimately benefit us all.”

The Supreme Court opinion affirmed a ruling issued last year by the state’s Commonwealth Court.

Justices Max Baer, Debra Todd and Christine Donohue joined Saylor in the majority. Justice David N. Wecht and Justice Sallie Updyke Mundy each wrote dissenting opinions. Justice Kevin M. Dougherty, who is from Philadelphia, did not participate in the case.

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