The American Beverage Association, other industry groups, retailers and distributors have filed a lawsuit against the city of Philadelphia chal- lenging its tax on sugar-sweetened beverages (SSBs), arguing the statute unlawfully attempts to circumvent Pennsylvania’s taxation supremacy. Williams v. City of Philadelphia, No. 160901452 (Penn. Ct. C.P., Phila- delphia Cty., filed September 14, 2016).
The plaintiffs assert the statute creates “a roadmap for every local government in the Commonwealth [of Pennsylvania] to evade the Commonwealth’s supreme taxation structure on thousands of products— from over-the-counter pharmaceuticals to cars—merely by imposing a duplicative tax at a different level in the distribution chain than a tax already imposed by the Commonwealth.” Because the beverages subject to the Philadelphia tax are also subject to Pennsylvania tax, the city tax duplicates the state tax, the plaintiffs argue, which amounts to “seizing the taxing authority expressly reserved to the Commonwealth in contra- vention of the Sterling Act’s prohibition on local taxation of a ‘privilege, transaction, subject or occupation, or on personal property, which is now or may hereafter become subject to a State tax or license fee.’”
The plaintiffs seek an injunction preventing enforcement of the soda tax, which was enacted and became effective in June 2016, as well as declara- tory judgment holding the tax as invalid and without legal effect.