By Scott Calvert
A Philadelphia judge on Monday dismissed the beverage industry's legal effort to block the city's planned tax on sugary and sweetened drinks, clearing the way for the levy to take effect Jan. 1.
The president of the Pennsylvania Food Merchants Association, one of the plaintiffs in the lawsuit, said the industry coalition fighting the tax would appeal the ruling.
But stores are getting ready for the tax to take effect. "Our members are preparing and training their employees who work in the checkout line to inform customers why in some cases the cost of beverages is going to double," said David McCorkle, president of the association, whose members include about 300 convenience stores and supermarketsin Philadelphia.
"A lot of people are going to be going across county lines to buy these sweetened beverages," he added.
Philadelphia in June became the first large U.S. city to pass a tax on soft drinks after the City Council approved a tax of 1.5 cents per ounce on nonalcoholic beverages with added sweeteners, ranging from soda to sports drinks and energy drinks. Philadelphia Mayor Jim Kenney pushed for the tax on distributors as a way to raise $91 million annually for prekindergarten and other city services.
Five other local U.S. governments, including San Francisco, Oakland and Albany, Calif., Boulder, Colo., and Cook County, Ill., followed suit with similar measures.
Beverage companies and retailers sued Philadelphia in September, arguing the tax is unconstitutional because such drinks already are subject to a state sales tax, and Pennsylvania law prohibits cities from imposing duplicate taxes.
But Judge GaryGlazer of the Philadelphia Court of Common Pleas rejected those arguments and dismissed the lawsuit in its entirety.
Mr. Kenney said the decision goes beyond vindicating legal principles. "It is victory for Philadelphians, who have waited far too long for investment in their education system and in their neighborhoods," Mr. Kenney said in a statement, calling on the beverage industry to accept the ruling.
The lawsuit also claimed cities or states are barred from taxing items including sweetened drinks that are purchased with federally funded food stamps under the Supplemental Nutrition Assistance Program, or SNAP.
Philadelphians Against Grocery Tax Coalition, a group of local business owners and individuals opposed to the tax, issued a statement saying: "We will continue to oppose this discriminatory and regressive tax, which is not a sustainable revenue source to support important initiatives like pre-K programs. Philadelphiafamilies will be shocked in January when prices jump on more than one thousand common beverages, including teas, soft drinks, juice drinks and no-calorie and low-calorie options."
Other plaintiffs include the American Beverage Association, the beverage distributors and two city residents.
Commissioners in Cook County, Ill., last month narrowly approved a penny-per-ounce tax on soda and other sweetened beverages, hoping to raise more than $200 million a year.
Also last month, voters in San Francisco, Oakland and Albany, Calif., passed ballot measures to impose a penny-per-ounce levy on nonalcoholic drinks with caloric sweeteners, while Boulder, Colo., residents approved a tax of two cents an ounce.
Berkeley, Calif., in 2014 became the first U.S. city to pass a tax on sweetened beverages.
Write to Scott Calvert at email@example.com
(END) Dow Jones Newswires
December 19, 2016 16:14 ET (21:14 GMT)
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