In a brief filed Thursday, lawyers for the city called the sweetened beverage tax a "political choice of necessity," and asked the state Supreme Court to dismiss a lawsuit that calls into question its legality.
The American Beverage Association, along with some Philadelphia residents and businesses, filed suit in Common Pleas Court last week, calling the so-called soda tax unconstitutional. Lawyers also filed a petition asking the Supreme Court to take up the case immediately.
The tax will add 1.5 cents per ounce to the cost of most sugary and diet beverages. Mayor Kenney sought it to pay for expanded early childhood education and a number of other initiatives. The tax, applied at the distributor level, is expected to generate about $92 million annually.
The opponents argue that the tax is preempted by the state sales tax, which applies to sweetened beverages, and would violate a state law that requires similar products to be taxed at the same rate. In its brief, the city rejected those arguments, saying the tax applies only to distribution-level transactions, which are not taxed under the Pennsylvania Sales and Use Tax.
"No consumer ever has tax liability" for the sweetened beverage tax, the brief states.
The city said it did not object to the Supreme Court's taking the case. However, the city's lawyers want at least four months of fact-finding process first. They rejected the plaintiffs' request to resolve the case by Dec. 31, the day before the tax would go into effect.
"While we also would like a prompt resolution, the beverage industry has had months to load up their petition with allegations and expert opinions," Ken Trujillo, one of two attorneys hired by the city to help on the case, said Thursday. "In order to effectively respond, we need a reasonable amount of time to address their claims. Given what's at stake for Philadelphia's schools and communities, it's more important that the Supreme Court get it right than that it rule quickly."
Shanin Specter, attorney for the plaintiffs, said it was "surprising" that the city did not want to move more quickly on the case.
"If the city gets their way, the legality of the tax will not be decided until long after it goes into effect," Specter said. "If the tax is then voided by the courts, consumers who've been hurt by the tax won't be able to get their money back. That's simply wrong."
Specter also filed for an injunction to stop the city from collecting the tax.
The city's brief says that if the tax is invalidated, the city will refund any "aggrieved" taxpayer.
Another argument in the suit is that since products purchased through the Supplemental Nutrition Assistance Program (SNAP), popularly known as food stamps, are exempt from sales taxes, implementing a levy on such purchases would violate state and federal rules.
The city rejected that, saying again that the tax is at the distributor level and not on consumer purchases.
The city hired Trujillo and Mark Aronchick to help the Solicitor's Office defend the tax. The city is allowing for up to $1.6 million to be spent per year in legal fees related to the tax fight.
"This litigation is an effort to deprive local government of the right to raise revenues at a time when the state and federal governments are not fully funding local needs," the brief concludes. "That the city has chosen to tax transactions not taxed by the commonwealth is a political choice of necessity."
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