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Philadelphia's tax on soda and other sweetened drinks was upheld Wednesday when the state's highest court rejected a challenge to the law by merchants and the beverage industry.
The Supreme Court ruled the 1.5-cent-per-ounce levy is aimed at distributors and dealer-level transactions and does not illegally duplicate another existing tax.
The four-justice majority said the state taxes sales at the retail level, a cost that falls directly on consumers, but the beverage tax applies to distributor and dealer-level transactions.
"The payer of the beverage tax is the distributor, or in certain circumstances, dealers, but never the purchasing consumer,'' wrote Chief Justice Thomas Saylor for the majority.
Philadelphia's enactment of the soda tax has inspired several other cities around the country to pass similar measures. The Philadelphia tax is formally called the "sugar-sweetened beverage tax'' but applies more widely to include some drinks with sugar substitutes.
The beverage tax raised nearly $79 million in 2017, over its first 12 months in place.
Both dissenting justices said the tax does duplicate taxes already in place on retail sales of soda in the city, violating the Depression-era Sterling Act.
"A rose by any other name smells just as sweet, and, whether styled a retail tax or a distribution tax, the levy here at bar, like the state sales tax, raises revenue specifically by burdening the proceeds from the retail sale of sugar-sweetened beverages,'' wrote Justice David Wecht, who dissented. "This the Sterling Act does not allow.''
If fully passed on to consumers, Philadelphia's soda tax represents an increase of $1.44 on a six-pack of 16-ounce bottles.
Philadelphia Mayor Jim Kenney, a Democrat, hailed the decision, saying the ruling "offers renewed hope for tens of thousands of Philadelphia children and families who struggle for better lives in the face of rampant poverty.''
The tax benefits schools, parks, playgrounds and libraries.
Shanin Specter, a lawyer for the consumers and groups that challenged the tax, said they were disappointed with the decision.
A bill to invalidate the Philadelphia soda tax and prevent other municipalities from imposing one is pending in the state House.