Gary Glazer ruled in December that the tax on sweetened beverages in Philadelphia can stand, dismissing the legal challenge in its entirety. This paves the way for official enactment of the tax beginning January 1, 2017. Several local retailers, as well as PFMA, filed suit challenging the tax.
The challenge revolved around three different factors. In his ruling, Judge Glazer wrote the following:
• The tax is not duplicative with the state sales tax. Pennsylvania law prohibits localities from adding taxes that are already assessed by the state without the state’s statutory permission. In the eyes of the court, as the beverage tax is assessed to distributors and not customers, this challenge does not apply. In his ruling, Judge Glazer wrote, "The respective taxes apply to two different transactions, have two different measures and are paid by different taxpayers."
• The tax is not preempted by SNAP. The Supplemental Nutrition Assistance Program (SNAP) prohibits SNAP benefits to pay a sales tax. As above, the court ruled that the beverage tax is not a sales tax, but assessed upon distributors. "The tax is not collected upon ‘purchases’ at ‘retail’ made with food stamps, but only upon non-retail, distributor-level transactions."
• The tax does not violate the Uniformity Clause of the Pennsylvania Constitution. The Pennsylvania Constitution requires that all taxation for similar products or classes be applied in the same manner. According to the judge’s ruling, two of the four classes listed by the plaintiffs, retailers and consumers, are not subject to the tax. “The (beverage tax’s) manner and measure of calculating the tax is uniformly applied to distributors… As such, all distributors are subject to the same tax calculation formula and therefore no disparate treatment exists within the distributor class in regard to the formula and rate of tax.”
The challenge revolved around three different factors. In his ruling, Judge Glazer wrote the following:
• The tax is not duplicative with the state sales tax. Pennsylvania law prohibits localities from adding taxes that are already assessed by the state without the state’s statutory permission. In the eyes of the court, as the beverage tax is assessed to distributors and not customers, this challenge does not apply. In his ruling, Judge Glazer wrote, "The respective taxes apply to two different transactions, have two different measures and are paid by different taxpayers."
• The tax is not preempted by SNAP. The Supplemental Nutrition Assistance Program (SNAP) prohibits SNAP benefits to pay a sales tax. As above, the court ruled that the beverage tax is not a sales tax, but assessed upon distributors. "The tax is not collected upon ‘purchases’ at ‘retail’ made with food stamps, but only upon non-retail, distributor-level transactions."
• The tax does not violate the Uniformity Clause of the Pennsylvania Constitution. The Pennsylvania Constitution requires that all taxation for similar products or classes be applied in the same manner. According to the judge’s ruling, two of the four classes listed by the plaintiffs, retailers and consumers, are not subject to the tax. “The (beverage tax’s) manner and measure of calculating the tax is uniformly applied to distributors… As such, all distributors are subject to the same tax calculation formula and therefore no disparate treatment exists within the distributor class in regard to the formula and rate of tax.”
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