The American Beverage Association and others on Wednesday filed a lawsuit to try to block a soda tax set to take effect in Philadelphia in January.
The beverage industry had spent more than US$10 million fighting the plan before the Philadelphia City Council approved it in June.
The US$0.015 per ounce (28.3g) tax amounts to US$0.18 on a 340g can of soda or US$1.44 on a six-pack of 454g bottles.
Photo: AP
Berkeley, California, has a similar soda tax, while Chicago taxes retail soft drink sales and fountain drinks. However, soda tax proposals have failed in more than 30 cities and states.
The beverage industry groups, restaurants and consumers who sued complain that the tax duplicates the state sales tax already imposed on soda.
Hotel stays in Philadelphia are also taxed by state and city authorities.
However, lawyer Shanin Specter, who filed the soda tax lawsuit, said the city did not get the permission needed from the state to impose a duplicative tax.
Philadelphia Mayor Jim Kenney sold the city council on the soda tax by pledging to spend most of the estimated US$90 million in new tax revenue next year to pay for prekindergarten, community schools and recreation centers.
The lawsuit said the tax on both sugary and diet beverages is unfairly based on volume, not price, resulting in a higher tax rate on soda than on more expensive energy or coffee drinks.
“The tax will meaningfully diminish the everyday purchasing power of Philadelphia residents — particularly those on a limited or fixed income — and will put the city’s small businesses that sell soft drinks at a material competitive disadvantage relative to comparable businesses just outside the city’s borders,” the lawsuit said.
Kenney, in a statement on Wednesday, said the tax was levied on beverage distributors, not directly on consumers.
“While it is repugnant that the multibillion-dollar soda industry would try to take away these educational and community programs from the hundreds of thousands of Philadelphians who need them, we were not surprised by their lawsuit given the US$10 million they have already spent opposing the tax,” he said. “I have no doubt we’ll be successful in defeating the lawsuit.”
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