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September 25, 2016

Beverage association sues to block Philly's soda tax

The American Beverage Association, along with some Philadelphia residents and businesses, filed a lawsuit Wednesday to block the city's recently enacted sweetened beverage tax, arguing it is unconstitutional.

The lawsuit was filed in Common Pleas Court but lawyers for the plaintiffs are asking that the state Supreme Court take up the case. They are requesting an injunction to stop the city from collecting the tax, which goes into effect Jan. 1.

"The Supreme Court will doubtlessly decide the case eventually. We think it's important for the citizens of Pennsylvania, including Philadelphians, that they do so sooner rather than later," Shanin Specter, the attorney representing the 10 plaintiffs, said.

The sweetened beverage tax will add 1.5 cents per ounce to the cost of most sugary and diet beverages. Mayor Kenney sought the so-called soda tax as a way to pay for expanded pre-kindergarten and a number of other initiatives. The tax, signed into law in June, is expected to generate about $92 million annually.

The lawsuit filed Wednesday contends that the new tax is preempted by the state sales tax and would violate state law that requires similar products to be taxed at the same rate.

The lawsuit also argues that products purchased through the Supplemental Nutrition Assistance Program (SNAP), popularly known as food stamps, are exempt from sale taxes and therefore implementing a soda tax on those products purchased with food stamps would be in violation of such state and federal rules.

"By taxing those beneficiaries, the city will siphon off $23 million in federal money to the city treasury and away from Philadelphia's 492,000 most needy residents," a press release on the lawsuit said.

That argument assumes that the soda tax is a type of sales tax, which is at the heart of the case.

The city contends the soda tax is not a sales tax because it is applied at the distributor level and not at the point of purchase.

The beverage industry argues that the soda tax is a sales tax because although it is paid by distributors, the tax will likely be passed in part by consumers.

The lawsuit argues that the city tax would violate the state constitution's uniformity clause, which requires similar products to be taxed at the same rate.

The suit notes that the "the tax is based on volume not value," meaning the more expensive a beverage, the less the tax would be as a percentage of overall cost.

The suit cited past caselaw showing that the state Supreme Court has rejected that type of taxation when it involved property, liquor and coal.

The plaintiffs also argue that if the courts allow Philadelphia to tax sweetened beverages, that "would provide a road map for every local government in the Commonwealth to evade the commonwealth's supreme taxation structure."

cvargas@phillynews.com

215-854-5520

@InqCVargas


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Paused

Beverage association sues to block Philly's soda tax

The American Beverage Association, along with some Philadelphia residents and businesses, filed a lawsuit Wednesday to block the city's recently enacted sweetened beverage tax, arguing it is unconstitutional.

The lawsuit was filed in Common Pleas Court but lawyers for the plaintiffs are asking that the state Supreme Court take up the case. They are requesting an injunction to stop the city from collecting the tax, which goes into effect Jan. 1.

"The Supreme Court will doubtlessly decide the case eventually. We think it's important for the citizens of Pennsylvania, including Philadelphians, that they do so sooner rather than later," Shanin Specter, the attorney representing the 10 plaintiffs, said.

The sweetened beverage tax will add 1.5 cents per ounce to the cost of most sugary and diet beverages. Mayor Kenney sought the so-called soda tax as a way to pay for expanded pre-kindergarten and a number of other initiatives. The tax, signed into law in June, is expected to generate about $92 million annually.

The lawsuit filed Wednesday contends that the new tax is preempted by the state sales tax and would violate state law that requires similar products to be taxed at the same rate.

The lawsuit also argues that products purchased through the Supplemental Nutrition Assistance Program (SNAP), popularly known as food stamps, are exempt from sale taxes and therefore implementing a soda tax on those products purchased with food stamps would be in violation of such state and federal rules.

"By taxing those beneficiaries, the city will siphon off $23 million in federal money to the city treasury and away from Philadelphia's 492,000 most needy residents," a press release on the lawsuit said.

That argument assumes that the soda tax is a type of sales tax, which is at the heart of the case.

The city contends the soda tax is not a sales tax because it is applied at the distributor level and not at the point of purchase.

The beverage industry argues that the soda tax is a sales tax because although it is paid by distributors, the tax will likely be passed in part by consumers.

The lawsuit argues that the city tax would violate the state constitution's uniformity clause, which requires similar products to be taxed at the same rate.

The suit notes that the "the tax is based on volume not value," meaning the more expensive a beverage, the less the tax would be as a percentage of overall cost.

The suit cited past caselaw showing that the state Supreme Court has rejected that type of taxation when it involved property, liquor and coal.

The plaintiffs also argue that if the courts allow Philadelphia to tax sweetened beverages, that "would provide a road map for every local government in the Commonwealth to evade the commonwealth's supreme taxation structure."

cvargas@phillynews.com

215-854-5520

@InqCVargas



Beverage association sues to block Philly's soda tax

The American Beverage Association, along with some Philadelphia residents and businesses, filed a lawsuit Wednesday to block the city's recently enacted sweetened beverage tax, arguing it is unconstitutional.

The lawsuit was filed in Common Pleas Court but lawyers for the plaintiffs are asking that the state Supreme Court take up the case. They are requesting an injunction to stop the city from collecting the tax, which goes into effect Jan. 1.

"The Supreme Court will doubtlessly decide the case eventually. We think it's important for the citizens of Pennsylvania, including Philadelphians, that they do so sooner rather than later," Shanin Specter, the attorney representing the 10 plaintiffs, said.

The sweetened beverage tax will add 1.5 cents per ounce to the cost of most sugary and diet beverages. Mayor Kenney sought the so-called soda tax as a way to pay for expanded pre-kindergarten and a number of other initiatives. The tax, signed into law in June, is expected to generate about $92 million annually.

The lawsuit filed Wednesday contends that the new tax is preempted by the state sales tax and would violate state law that requires similar products to be taxed at the same rate.

The lawsuit also argues that products purchased through the Supplemental Nutrition Assistance Program (SNAP), popularly known as food stamps, are exempt from sale taxes and therefore implementing a soda tax on those products purchased with food stamps would be in violation of such state and federal rules.

"By taxing those beneficiaries, the city will siphon off $23 million in federal money to the city treasury and away from Philadelphia's 492,000 most needy residents," a press release on the lawsuit said.

That argument assumes that the soda tax is a type of sales tax, which is at the heart of the case.

The city contends the soda tax is not a sales tax because it is applied at the distributor level and not at the point of purchase.

The beverage industry argues that the soda tax is a sales tax because although it is paid by distributors, the tax will likely be passed in part by consumers.

The lawsuit argues that the city tax would violate the state constitution's uniformity clause, which requires similar products to be taxed at the same rate.

The suit notes that the "the tax is based on volume not value," meaning the more expensive a beverage, the less the tax would be as a percentage of overall cost.

The suit cited past caselaw showing that the state Supreme Court has rejected that type of taxation when it involved property, liquor and coal.

The plaintiffs also argue that if the courts allow Philadelphia to tax sweetened beverages, that "would provide a road map for every local government in the Commonwealth to evade the commonwealth's supreme taxation structure."

cvargas@phillynews.com

215-854-5520

@InqCVargas


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