Appeals court finds anti-Philly soda tax lawsuit ‘without merit’

After months of consideration, the Commonwealth Court of Pennsylvania has found that an appeal that questioned the legality of Philadelphia’s soda tax legislation is “without merit,” saying the city has the right to collect the tax and that an earlier court decision should be upheld.

In an opinion written by Commonwealth Court Justice Michael H. Wojcik released Wednesday morning, Wojcik said the appellate court upheld an earlier ruling, from December of last year, where the Philadelphia Court of Common Pleas found that the city’s 1.5 cent per ounce tax on sweetened beverages was legal.

The ruling notes that since the tax is on the distributor of the beverage, and not on retail sales to the consumer, the tax doesn’t act as a duplicate sales tax, as soda tax opponents had argued.

Following the court’s decision, Mayor Jim Kenney released a statement touting the court’s ruling.

“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,” the mayor said in the statement. “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.”

Attorney Shanin Specter, who handled the lawsuit, told the Inquirer they will appeal the Comonwealth Court decision to the Supreme Court of Pennsylvania. 

The American Beverage Association had joined bottlers, distributors and other businesses in an appeal of the earlier ruling, hoping to get the tax abolished. 

Earlier this week, Billy Penn reported that, in its first year, the city’s soda tax is expected to fall short of its revenue goals of $46 million.

Citing this budget shortfall, the Ax The Beverage Tax Coalition, who had supported the lawsuit against the tax, said in a statement that they were disappointed by Wednesday’s ruling.

“We are deeply disappointed in today’s ruling. But no ruling can obscure the pain Philadelphia’s beverage tax continues to inflict on families and local businesses. After only five and a half months, this tax has already caused many Philadelphians to lose their jobs – and more are at stake,” read a statement shared by coalition spokesperson Anthony Campisi. “This tax has also caused prices to skyrocket on thousands of beverages, which in turn has forced hardworking families to pay drastically higher prices.”

Also, in a look at this shortfall released on Tuesday, City Controller Alan Butkovitz noted that soda tax collections through this year are about $5.1 million short of projections, which, he said, could create problems for the initiatives the city hopes to fund through soda tax proceeds.

“These shortfalls are potentially creating a multimillion dollar burden on the city in order to pay for programs and initiatives like Pre-K and Rebuild,” said Butkovitz.

Rebuild, which Metro looked at in a recent Fix Philly column, had been awaiting a conclusion to this lawsuit before it could move forward with securing a needed bond issue for $300 million in funding.

However, an ongoing push to ensure that minority laborers have an equal opportunity in securing the work potentially provided through ReBuild could stall this effort for months.

To ensure minority labor is involved in this process, City and State reports that City Councilwoman Maria Quiñones-Sánchez (D-7th Dist.) believes the vote needed to authorize bond funding for Rebuild could be pushed back until the fall.

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