A second court upheld the Philadelphia soda tax Wednesday morning, welcoming news for Mayor Jim Kenney and his administration.
“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,” Kenney said in a statement. “As I stated when the beverage tax was upheld in the Common Pleas Court, the children of Philadelphia are waiting for the opportunities that the tax can provide.”
The Philadelphia Beverage Association, Pennsylvania Beverage Association along with several small local businesses and Philadelphia residents first filed a lawsuit against the 1.5-cents-an-ounce soda tax, officially called the Sweetened Beverage Tax, in September. Attorneys for the group argued the tax was unconstitutional based because it overlapped state food and drink taxes, among other arguments.
In December, Court of Common Pleas Judge Gary S. Glazer dismissed the anti-beverage tax group’s lawsuit on the grounds that the Philadelphia beverage tax was imposed on distributors, not consumers. Distributors then have the option to pass the tax on to consumers or not.
The anti-soda tax groups appealed the decision to the Commonwealth Court, where seven judges heard arguments in April.
In the majority opinion, Judge Michael H. Wojcik agreed with the Court of Common Pleas decision, saying, “In this case, the PBT (Philadelphia Beverage Tax) and the sales tax do not tax the same subject, or the same person, and the field covered by the PBT has not been pre-empted by the sales tax.”
While the Kenney administration expressed appreciation for the court’s 5-2 decision, a statement from the Ax the Philly Bev Tax coalition expressed disappointment and noted the economic consequences — including layoffs — affecting coalition’s members as a result of the tax that took effect in January.
“After only five and a half months, this tax has already caused many Philadelphians to lose their jobs — and more are at stake,” a release from the group said. “It’s time to bring the harm this tax has caused to an end.”
Ax the Bev Tax spokesman Anthony Campisi says the group is going to appeal the ruling to the Pennsylvania Supreme Court.
“Regardless of today’s ruling, the fact that this tax is bad for Philadelphia families has never been more clear,” he said.
Since the Beverage Tax was implemented, the city collected $25.6 million compared to the $30.8 million that was initially projected.
City Controller Alan Butkovitz pointed to lower projections on the part of the city.
“The city needs to collect $10 million in each of the next two months to meet its goal – a figure that appears to be significantly out of reach,” he said.
Campisi also took issue with Kenney’s statement that litigation has held up the city’s initiatives for children. The beverage tax revenue has been earmarked for several of the mayor’s initiatives such as expansion of pre-kindergarten programs as well as renovating city libraries and recreational spaces.
Prior to the anti-beverage tax group’s public decision to appeal, City Solicitor Sozi Tulante urged the group in the other direction in a statement.
“We appreciate the judges’ exhaustive examination of the matter, and urge plaintiffs to set aside a legal action that has now been soundly rejected by two courts,” Tulante said.
Other local groups also responded to the court’s decision.
“We applaud the Commonwealth Court’s decision to uphold the Beverage Tax,” Philadelphians for a Fair Future wrote in a statement. “Already, the tax has supported 2,000 new pre-K seats, which will be expanded by thousands over the next few years and will rebuild recreation centers, parks and libraries in neighborhoods all across the city.”
Teamsters Local 830, said it was “angry and disappointed by the Commonwealth Court’s decision to affirm the legality of the city’s reviled and discriminatory beverage tax,” offered Daniel Grace, the union’s secretary and treasurer.
“Our local union has already seen 155 of our hard working members lose their jobs due to tanking beverage sales in the city, which is a direct result of the beverage tax,” said Grace, whose union has more than 3,000 members in retail sales, distribution, warehousing and food industries.
Commonwealth Court Judge Anne E. Covey wrote the dissenting opinion for the minority, saying, “While I acknowledge that the Philadelphia Beverage Tax (PBT) does not appear to be duplicative of the Sales Tax because it is not explicitly labeled a retail sales tax, the majority ignores that the PBT is only triggered when there is a retail sale involved.”
This story was updated to reflect responses from local groups, the Commonwealth Court’s dissenting opinion and developments from the Ax the Philly Bev Tax coalition.