PA Supreme Court to take up appeal in Philadelphia Soda Tax case

The Pennsylvania Supreme Court on Tuesday granted the appeal in Williams v. City of Philadelphia, the case working its way through the state courts challenging the legality of the beverage tax levied by the City of Philadelphia.

The court, in granting the appeal, limited review of the issue to the following question: “Does the City's Tax violate the Sterling Act, 53 P.S. § 15971, which prohibits Philadelphia from imposing a tax on a transaction or subject that the Commonwealth already taxes?”

The case was dismissed by a Philadelphia Court of Common Pleas in December 2016 and found to be constitutional by the Commonwealth Court in June 2017.

The tax, which officially went into effect on January 1, 2017, calls for a levy of 1.5 cents per ounce on distributors of sweetened beverages.

The tax was initially anticipated to bring in $410 million over its first five years to be distributed for 6,500 additional pre-K seats and 25 community schools. Some funding from the tax was also earmarked for financing $300 million in new debt taken out by the city for improvements to existing parks, libraries, and recreation centers.

Speaking to the appeal Tuesday was Philadelphia City Solicitor Sozi Pedro Tulante.

“Given the enormous public attention paid to this case – in Philadelphia, the Commonwealth, and across the country – we are not surprised by the Supreme Court's decision to hear the appeal. Our confidence in the City’s authority to impose the tax has not wavered, and we welcome the Justices' thorough review of the Commonwealth Court’s decision that confirmed the legality of the tax,” Tulante said. “Ultimately, we look forward to the day when the City can begin full implementation of the essential programs funded by the tax – expanded pre-K, Community Schools and Rebuild – to the benefit of tens of thousands of Philadelphia children and families.”

Also providing a positive spin on the court's decision: Philadelphians for a Fair Future, the purportedly grassroots coalition of stakeholders pushing for the enactment of a soda tax. The group, which was launched by Philadelphia Mayor Jim Kenney, released a statement saying: "We applaud the Pennsylvania Supreme Court’s decision to hear the merits of the soda tax case. The Court’s decision puts us one step closer to getting a resolution of this issue, which has enormous consequences for the City’s future."

The tax has drawn the ire of a group of bipartisan state lawmakers who have joined in on the litigation.

One of those lawmakers, Sen. Anthony Williams (D-Philadelphia), said Tuesday that he hopes the Supreme Court will take into consideration the regressive nature of the beverage tax, which is allowed to be passed on to consumers.

“Whatever the revenues are used for, I’m a proponent for those things, but the way the tax is constructed – it will fall significantly on the poor, people of color, and those with a lack of transportation,” he said. “I think that’s clearly going to be seen as unfair because you are overtaxing a certain population, so that’s what I’m opposed to.”

Last fall, the Senate Local Government Committee held a hearing on the tax that heard from business owners about the negative impact of the tax.

“The beverage tax has cut beverage sales by half at our 13 ShopRite stores in the city and created storewide sales drops that vary from 10 to a whopping 25 percent,” said Jeffrey Brown, the owner of a number of Philadelphia grocery stores, at the hearing. “In my six ShopRite stores alone, sales are down an average of 15 percent storewide. And my beverage sales are down nearly 60 percent since the tax took effect in January. We know that shoppers are going outside the city to buy their beverages and they are taking all their grocery dollars with them.”

TOday's decision was applauded by the Teamsters, who have decried the tax as disastrous for union members who have less work as soda sales decline.

"It provides our suffering membership and our city’s struggling beverage companies, supermarkets, convenience stores and restaurants a sense of hope that this destructive, discriminatory tax may yet get overturned,” said Teamsters Local 830 Secretary-Treasurer Danny Grace in a statement.

Philadelphia Mayor Jim Kenney and City Council President Darrell Clarke have repeatedly defended the tax as not only having the overwhelming support of City Council but also as a local solution to solve local issues and grow already successful programs.

“This tax and its associated programs represent an innovative, cost-efficient local funding solution to solve universal challenges,” they said in joint testimony in the October hearing. “The City of Philadelphia – which has continued to pass balanced budgets and increase investments in our children while actually lowering taxes in the next fiscal year and significantly improving our credit rating over the last five years – has continued to focus on local solutions.”

Neither a briefing schedule nor an argument date has been set by the court as of press time.

Jason Gottesman is the Harrisburg Bureau Chief of The PLS Reporter, a news website dedicated to covering Pennsylvania’s government.