Philadelphia’s sweetened beverage tax has left a bad taste in the mouths of a group of retailers, distributors and consumers of those drinks—so much so that they’ve filed a lawsuit seeking to repeal the tax.
The plaintiffs, which include the American and Pennsylvania beverage associations, claim in court papers filed Wednesday in the Philadelphia Court of Common Pleas that the tax is unlawful.
The tax, approved by the Philadelphia City Council in June, was the brainchild of Mayor Jim Kenney, who pitched it as a way to raise tens of millions of dollars to fund early childhood education initiatives throughout the city.
The plaintiffs are asking the court for an injunction that would halt the city from collection proceeds from the tax. At the same time, they are petitioning the state Supreme Court to review the case.
“I believe that this issue will be decided by the Pennsylvania Supreme Court eventually,” the plaintiffs’ attorney, Shanin Specter of Kline & Specter, said. “Because of its immediate public importance, it will be preferable for the citizens of Pennsylvania, including Philadelphians, for the Supreme Court to decide the case sooner rather than later.”
In a statement issued by the mayor’s office Wednesday afternoon, Kenney and City Solicitor Sozi Pedro Tulante defended the tax.
“We have always been confident that the sweetened beverage tax was a proper exercise of City Council’s authority and that it will be upheld in court. We are currently in the process of reviewing the complaint that was filed against the city of Philadelphia by the American Beverage Association and co-plaintiffs,” Tulante said.
Kenney added, “Pre-K, community schools and improved parks, rec centers and libraries will give Philadelphia’s children the fair shot they deserve. While it is repugnant that the multibillion-dollar soda industry would try to take away these educational and community programs from the hundreds of thousands of Philadelphians who need them, we were not surprised by their lawsuit given the 10 million dollars they have already spent opposing the tax.”
In the plaintiffs’ complaint, Specter and Morgan, Lewis & Bockius attorney Marc Sonnenfeld argued that the tax circumvented Pennsylvania law and generated revenue for the city at the expense of the state.
“At the same time, the tax will meaningfully diminish the everyday purchasing power of Philadelphia residents—particularly those on a limited or fixed income—and will put the city’s small businesses that sell soft drinks at a material competitive disadvantage relative to comparable businesses just outside the city’s borders,” court papers said.
The plaintiffs claim that they are being taxed twice for the same product; Pennsylvania’s 6 percent sales tax already applies to soft drinks.
Additionally, they allege the ordinance hurts low-income Philadelphians the most, primarily those on food stamps through the federally funded Supplemental Nutrition Assistance Program (SNAP).
“The tax sharply reduces the purchasing power of SNAP participants in contravention of the SNAP program,” court papers said, adding “the tax shifts federal money that is supposed to be used to increase the grocery-buying power of low-income residents to the city treasury in contravention of the sales and use tax exemption for purchases made with SNAP funds.”
As of press time, the city had not filed a response to the lawsuit.
P.J. D’Annunzio can be contacted at ­215-557-2315 or email@example.com. Follow him on Twitter @PJDannunzioTLI.