HARRISBURG – After the June 14 opinion filed by the Commonwealth Court of Pennsylvania affirming the Philadelphia County Court of Common Pleas' judgment that the Philadelphia beverage tax is constitutional, one attorney contends that the decision is well-reasoned.
A group of individuals, including food and beverage companies, sued the city of Philadelphia claiming the Philadelphia Beverage Tax on Sugar Sweetened Beverages (PBT) was unconstitutional. The PBT went into effect in January and imposes a 1.5 cent per fluid ounce tax on "sugar-sweetened beverages," which is paid for by either the beverages' dealer or distributor.
The case moved to the Commonwealth Court, and Judge Michael Wojcik and five other judges rejected the arguments of the objectors.
John Gotaskie Jr., a Fox Rothschild LLP attorney who is based in Pittsburgh, has studied the case and views the Commonwealth Court's opinion as sensible.
"At the end of the day, the opinion was very well-reasoned," Gotaskie told the Pennsylvania Record. "It was a 5-2 decision of the Commonwealth Court, and I thought the majority had well-reasoned arguments as to why the tax was constitutional."
The objectors argued that the tax is a retail sales tax, which would be illegal for municipal governments to impose. The Commonwealth Court rejected this claim and replied that the beverage tax is actually an excise tax, which is not imposed at the time of a retail purchase.
Additionally, the objectors alleged that the tax is an unconstitutional property tax because it is imposed on quantity instead of value. The Commonwealth Court opposed this allegation because since the court established that the tax is an excise, it is therefore constitutional for it to be imposed based on quantity.
The case still has a chance to be heard by the Supreme Court of Pennsylvania. Gotaskie said he finds that while the Supreme Court takes on cases sparingly, the court may take this one, not only because it is high-profile, but because it has the potential to set off a trend of similar ordinances around the state.
"There's a higher chance the Supreme Court will take this case because courts, like anyone else, like to look at high-profile issues," Gotaskie said.
"Also, other communities across Pennsylvania are looking at Philadelphia as a test case. If the city is successful in this case, I think you'll see many more similar cases in the state, so that's a reason why the Supreme Court might want to weigh in before it becomes something that a lot of places join in on."
As far as the affect that this case could have on the rest of the country if the PBT prevails, Gotaskie said it could definitely serve as an instructive lesson for others who are considering a similar tax to follow.
"I think it will be an instructive lesson to other states and municipalities that the beverage tax is OK," Gotaskie said. "Others can look at this case and see that under Pennsylvania law, this was a municipality that found a way to create a constitutional tax, and that this one has been upheld (to date). They can take a look at this beverage tax, and see if it can be transferable to another state."