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The Beverages Strike Back; Lawsuit Filed To Block Philly's Sugar Tax

The Beverages Strike Back; Lawsuit Filed To Block Philly's Sugar Tax

A soda tax passed by the city of Philadelphia may be unconstitutional, at least according to the American Beverage Association (ABA).

The city of Philadelphia passed a soda tax that adds 1.5 cents per ounce to the cost of sugary drinks and will become effective on January 1, 2017.

According to Phillymag, the ABA along with local residents and businesses are arguing that the city has no right to tax soft drinks on top of the already existing state sales tax. The city argues that its tax is not classified as a sales tax because the distributor rather than the consumer is taxed.

Naturally, the ABA believes the tax imposed on the distributor will be passed on the consumer.

Related Link: Coca-Cola European Partners Less Favorable Than Other Coke Bottlers -Credit Suisse

According to the lawsuit, the city "may not circumvent the Commonwealth's supreme taxation authority simply by changing its label or shifting the point at which the Tax is imposed."

The suit also argues that the city must tax similar products equally which it is not doing. Moreover, the city cannot tax products that are purchased through food stamps or the Supplemental Nutrition Assistance Program.

The city plans on allocating the new tax revenue, estimated to be around $91 million a year, toward pre-k, community schools as well as parks and recreation centers.

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