Groups including the American Beverage Association are trying to knock down Philadelphia Mayor Jim Kenney’s sweetened drinks tax in court before it is supposed to take effect in January. The plan was to fund this through a 1.5 cents per ounce soda tax.
Advertisement
On Wednesday, Kenney cast opponents of the tax in a villainous light.
Millions were spent on campaigns for and against the tax. The ABA vowed immediately to take legal action, and the suit seeks an injunction before tax collections begin.
A U.S. drinks industry body and small businesses have launched a lawsuit to try to block a soft drinks tax in the USA city of Philadelphia.
Plaintiffs also argued Philadelphia’s levy violates the state constitution requiring uniformity of taxation because the levy is calculated by volume, not value.
“The Soda Tax helps no one, and hurts many”, said Danny Grace, of Teamsters Local 830. The filing argues this tax would put the federal government in the position of subsidizing expanded pre-K and the other initiatives the new tax is tended to support.
It was expected the tax would bring in an estimated US$91 million a year.
Other plaintiffs in the suit aimed at halting the soda tax include the Pennsylvania Beverage Association, the Pennsylvania Food Merchants Association, wholesale distributor Metro Beverage of Philadelphia and the popular South Philly sandwich destination John’s Roast Pork. At the center of the argument is whether or not the soda tax counts as a sales tax: the city argues that it doesn’t because the distributor, not the consumer, is taxed, but the ABA argues that consumers will end up bearing the brunt of the tax.
“Given how great the tax burden is relative to the market price at the retail level and wholesale price at the distribution level for many beverages, it would be economically infeasible for a distributor or retailer to absorb the Tax”.
“When it was discussed in [City] Council, they felt that if it was illegal, the court would say so”, said Specter.
“We don’t have to prove it’s a sales tax in order to win”, Specter.
City officials said they were reviewing the complaint but vowed to “vigorously” defend the tax. He expects the soda tax to follow this trend.
ABA and others say the tax violates state law, will “meaningfully diminish the everyday purchasing power of Philadelphia residents”, and disadvantage small businesses, according to court documents.
Advertisement
Mayor Kenney has issued a statement calling the lawsuit, “repugnant”, but not surprising, given the millions the beverage industry spent to fight passage of the tax. “I have no doubt we’ll be successful in defeating the lawsuit”. Several organizations have responded to the lawsuit, like the Philadelphians Against the Grocery Tax Coalition and the local Teamsters union, both of which have denounced the soda tax.
