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Soda Tax Is Legal in Pennsylvania

Philadelphia legislatures have tighten the screw caps a bit more on those naughty soda drinkers. The Pennsylvania Supreme Court upheld the Philadelphia Beverage Tax (PBT), which adds a 1.5 cent per fluid ounce tax, paid by beverage distributors, on "sugar sweetened beverages."

Dubbed the "Soda Tax," this applies to sweetened and sugar-substitute sodas, as well as some juices and sports drinks. Philadelphia now joins the ranks of fellow Soda Tax cities San Francisco, Oakland, Berkeley, Boulder, and Seattle. And the list keeps growing.

Is This a Double Tax?

The city successfully defended the ordinance based on the Sterling Act, a Depression-era law that enables cities with populations over 1 million to enact certain taxes in order to pad city coffers. Sterling Act taxes are legal so long as it doesn't amount to a double tax. Those fighting the PBT claim that indeed it is a double tax, since buyers already pay an 8% sales tax on the drinks. But the Pennsylvania Supreme Court disagreed.

The sales tax is paid by the consumer, and the PBT is paid by the distributor, therefore it is two different taxes. The distributors countered that they were going to pass 100% of the tax on to the consumer to cover their losses, so in essence it is a double tax. The court, however, disagreed, by a vote of 4-2.

Helping or Penalizing the Poor?

The purpose of Soda Taxes, according to the World Health Organization, should be to raise money to help fight obesity and other diet-related diseases. Governments claim they will use the money to perform outreach services, especially to the low-income population, to educate them on why sugary sodas are bad for your health, and what better beverage choices could be made.

However, opponents of Soda Tax laws believe this tax disproportionately hits poverty stricken people the hardest, since they are the largest consumers of sugary beverages. Not only are the poor spending more, but also earning less. When a Soda Tax was enacted in Mexico, 10,000 jobs were lost to those desperately in need of income. They claim it would be better to subsidize these outreach programs through a different, more broad-based tax.

Showdown in Philly

The PBT was enacted by the state legislature. Philadelphia is the only city in Pennsylvania that is large enough to be effected by the Sterling Act - the next largest city is Pittsburgh with 300,000 residents. In a Pew Poll, Philly residents were against the tax, 54% to 46%.

The Ax The Philly Bev Tax Coalition vows to continue to fight this tax, and claims "it is up to our elected officials to listen to the concerns of the their constituents and provide Philadelphians much needed relief by reversing this tax." November elections are already looking to be hot. And in Philadelphia, they may just have gotten a little hotter. It will be interesting to see which drinks voters buy to cool off come election day.

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