Pennsylvania Lawmakers Join Lawsuit Challenging Philadelphia Soda Tax

Published February 20, 2017

More than 30 Pennsylvania state lawmakers from the state’s House of Representatives and Senate are joining local business owners’ legal fight against the City of Philadelphia’s newly enacted sin tax on soda and other sweetened beverages.

The law, which took effect in January, adds 1.5 cents per ounce to the price of soda and other sweetened beverages, or about 30 cents to the price of a 20 ounce bottle of soda.

On February 6, 36 state lawmakers filed an amicus brief on behalf of the plaintiffs, voicing their support for Philadelphia business owners appealing the decision in Pennsylvania’s Commonwealth Court, an appellate court composed of nine elected judges.

In December 2016, Pennsylvania Court of Common Pleas Judge Gary Glazer ruled in favor of the city government, dismissing the lawsuit. In September 2016, the owners of city restaurants, such as John’s Roast Pork and City View Pizza; business owner associations, such as the National Association of Theater Owners of Pennsylvania; and local residents filed a lawsuit challenging the tax.

‘Many Problems’ Created

Elizabeth Stelle, director of policy analysis at the Commonwealth Foundation, says sin taxes are more trouble than they’re worth.

“There are many problems with sin taxes,” Stelle said. “For starters, revenue is unreliable and tends to decline over time. If something is worth the investment, politicians should be able to garner support for reliable funding sources.”

Chasing Businesses Out of Town

Stelle says she has already seen examples of Philadelphia entrepreneurs being driven out of business by the city’s many sin taxes.

“Yasir Ishmael runs a convenience store one block away, [in Philadelphia], right below the 52nd Street ‘L’ stop,” Stelle said. “He said that between the new sweetened beverage tax and the nearly $5-per-pack tax on cigarettes, some of his customers are opting to ride the train out of the city to make their purchases.”

Taxing the Poor

Joe Carter, a senior editor with the Acton Institute for the Study of Religion and Liberty, says sin taxes burden low-income earners more than other people. (The author of this news story is an employee of the Acton Institute, in addition to serving as a writer for Budget & Tax News.)

“We’re taxing a product that is used mostly by the poor,” Carter said. “It’s kind of a class-based tax to discourage behavior we look down on.”

Government Sin-dustry

Carter says sin taxes are an example of governments legislating morality.  

“We’re not really trying to discourage consumption,” Carter said. “It’s not effective. It’s really a moral judgment about what they should or should not consume. The tax isn’t really enough to discourage people from drinking sodas. It’s still cheaper for someone who is poor to go to the vending machine and get a Coke than to go to Starbucks and get a soy mocha latte.”

Carter says discouraging alleged sins is not the proper role of government.  

“We shouldn’t allow the state, in the tax code, to discourage legal types of consumption,” Carter said. “That should be the place of the church and parents. It’s not the role of the state.”