Pa. Supreme Court rules in favor of Philadelphia beverage tax

Ruling: City has the power to impose tax on distribution of sweetened beverages

Pat Loeb
July 18, 2018 - 10:25 am
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PHILADELPHIA (KYW Newsradio) — The Pennsylvania Supreme Court has delivered its long-awaited decision on Philadelphia's sweetened beverage tax, in favor of the city. 

It's been two years since City Council passed the 1.5 cent-per-ounce tax on sweetened beverages and a year and a half since it began collecting revenue. Since then, it has brought in $110 million.

With this decision, the city can now begin spending the revenue on the anti-poverty programs it's earmarked for: an expansion of pre-K, community schools and a rebuild of city facilities.

"We will now move expeditiously toward full funding of all of the three core programs funded by the beverage tax," said City spokesman Mike Dunn. "The administration is extremely grateful that the justices made a fair and careful review of this case."

The justices ruled 4-2 that the city does have the power to impose the tax, because it is on the distribution of sweetened beverages. Tax opponents, funded by the beverage industry, sued two years ago, arguing that the state's Sterling Act prohibits the city from taxing anything the state already taxes, and the state already collects sales tax on the same beverages. However, the judges upheld two lower court rulings that found the tax does not duplicate any state taxes because distribution, which the state could tax but doesn't, is separate from sales.

Two justices dissented, finding the tax too duplicative of the state sales tax. One wrote, "a rose by any other name smells as sweet," and the tax has the same effect as the sales tax.

Mayor Jim Kenney promised to quickly ramp up the programs the tax is earmarked for.

"Beyond the legal resolution, today's decisive ruling offers renewed hope for tens of thousands of Philadelphia's children and families who struggle for better lives in the face of rampant poverty," he said.

The beverage industry, however, is disappointed. Industry spokesman Anthony Campisi agreed it's the end of the line legally, but he said the industry is counting on the state legislature to eliminate it.

"Pennsylvania's elected representatives now have the responsibility of getting rid of this regressive tax," he said.