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As previously covered on this blog, Philadelphia’s 1.5-cent-per-ounce tax on distributors of sweetened beverages (including soda and diet soda, non-100% fruit drinks; sports drinks; flavored water; energy drinks; pre-sweetened coffee or tea; and non-alcoholic beverages intended to be mixed into alcoholic drinks) was conceived by city leaders as a revenue generating measure to fund local health and education needs. The law was challenged before its effective date (January 1, 2017) on grounds of double taxation in a complaint filed by the American Beverage Association (ABA), retailers, distributors, and consumers (see previous blog coverage here).
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Now, 15 months post-enactment, legal uncertainties remain, with ABA’s case to overturn the 1.5-cent-per-ounce tax accepted on appeal on January 30, 2018 by the Pennsylvania Supreme Court. Under Mayor Jim Kenney’s new five-year plan released March 1, 2018, programs would be expanded in fiscal year 2020, when officials expect the litigation will be over.
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Opponents argue that consistently soft revenue (15% less than estimated in the first 12 months) and scaled back funding for promised government programs indicate the unpopular tax is a huge policy failure. In contrast, the mayor’s office touts the soda tax as a success, stating that $79 million in revenue is within the margin of error and pointing to programs that have already benefitted.
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Both sides view the political and legal uncertainties of the soda tax in Philadelphia as a cautionary tale for other cities that may be considering a sweetened beverage tax. Philadelphia warns of well-funded and organized opponents. Critics of the tax argue it is not an effective or reliable way to fund programs.
Opposing Views and Uncertain Future for the Philadelphia Soda Tax
Monday, March 12, 2018
