By Ronald D. Castille
Mayor Kenney and City Council are in the process of violating the Pennsylvania Constitution by enacting a tax on each ounce of sugar-sweetened beverages and - after the latest legislative shenanigans - certain diet beverages.
It is beyond dispute that only the state legislature can determine where and on what items a tax can be imposed. Harrisburg is why we in Philadelphia pay an 8 percent sales tax instead of the 6 percent sales tax in other parts of the commonwealth.
In my opinion, the proposed tax by the ounce is a thinly disguised sales tax, and the city knows as much. The practicality of the situation is this: If no one purchases one of these beverages, there is no tax consequence. If a purchaser does buy one of these beverages, then a tax arises because of the sale. Clearly it is a sales tax.
The city tries to claim that the tax is imposed on the distributor, not the consumer. The city implausibly believes the tax will not be passed on to the consumer. That is like believing the person who wants to sell you the Brooklyn Bridge can actually sell you the Brooklyn Bridge. No rational sellers of these beverages are going to take the tax's bottom-line hit on their profit margin. The tax will simply be passed on to the consumer.
That brings up the uniformity clause of the state constitution, which basically states that taxes must be uniform across the commonwealth. The city says the distributor will bear the burden of this tax. But a distributor in Reading or Altoona, for instance, would not have a similar tax on the distribution of these beverages. Consumers in other counties do not have to pay a similar tax on these beverages. In my opinion, that is a clear violation of the uniformity clause.
Even in Philadelphia, the proposed tax is not uniform and varies widely based on the type of beverage purchased. The tax on a two-liter bottle of sugared or diet soda costing $1 would amount to $1.01 - more than 100 percent. The tax on a 9.5-ounce Starbucks Frappuccino costing $3 would amount to 14 cents - less than 5 percent. How do you even calculate the tax on a 10-ounce fountain drink? Would the tax be calculated including the amount of ice in the cup or minus the ice in the cup?
So not only does the proposed tax clearly violate the uniformity clause, but it also is unfair to consumers.
In addition, the city administration sold this bill of goods as "for the kids," as a way to expand pre-K and upgrade recreation centers in Philadelphia. But recent news stories show that some of the revenue would be for purposes unrelated to pre-K or parks and recreation. Why wasn't that mentioned in the discussions of the proposed tax?
We should help the kids. We should promote a healthy lifestyle. This proposed tax would not have much impact on my personal budget, but I don't intend to pay an unconstitutional tax on beverages during the time it will take for the tax to be reversed in the courts. As a matter of principle, I will just go outside the city to buy my non-taxed sugared or diet beverages. It is sad that many Philadelphians don't have that option.
Ronald D. Castille is a former chief justice of Pennsylvania. firstname.lastname@example.org