The American Beverage Association (ABA) is spearheading a lawsuit challenging Philadelphia’s soda tax which is slated to take effect on January 1, 2017. 

  • As previously covered on this blog, on June 16, 2016, the Philadelphia city council voted 13-4 to approve a 1.5 cent per ounce tax on sugar-sweetened beverages.  The tax, which is slated to take effect on January 1, 2017, covers a variety of 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.  The tax will be levied on distributors, and the city expects to begin collecting tax revenues on January 1, 2017.
  • On September 14, 2016, the American Beverage Association (ABA) together with retailers, distributors and consumers filed a complaint in a Court of Common Pleas challenging Philadelphia’s soda tax.  The plaintiffs claim that the tax represents a violation of the Sterling Act, a Pennsylvania state law declaring that cities and local governments “shall not have authority to levy, assess and collect… any tax on a privilege, transaction, subject or occupation, or on personal property, which is now or may hereafter become subject to a State tax.”  This lawsuit follows on the ABA’s promise to take legal action against the tax in a June 16, 2016 press release responding to the passage of the Philadelphia soda tax earlier that day.
  • The reaction to Philadelphia’s tax continues to be predictably mixed, with industry largely opposed to the measure, and consumer advocacy groups lauding the potential benefits from the standpoint of reducing sugar consumption.  It remains to be seen what, if any, impact the outcome of the Philadelphia lawsuit will have on the appetite of other U.S. jurisdictions to pursue such legislation.