Tax, if upheld, would penalize consumers and the small businesses that serve them
Representatives for small businesses from across Pennsylvania filed an amicus brief last week in the Commonwealth Court, challenging the legality of a Beverage Tax (PBT) imposed by the City of Philadelphia. If upheld on appeal, the so-called “soda tax” will not only disrupt and distort the beverage marketplace in that City, but will also serve as a blueprint for similar taxes in other local jurisdictions, or for taxing other consumer products. The amicus brief argues that such taxes are illegal in part because they drain sales tax revenue from the state, and that the tax should be rejected because it penalizes consumers and the small businesses that serve them.
The groups joining on this amicus brief include the National Federation of Independent Business (NFIB), the Pennsylvania Chamber of Business and Industry, Pennsylvania Restaurant & Lodging Association, Pennsylvania Retailers’ Association, National Association of Theatre Owners, and the Tri-State Automatic Merchandising Council.
“At its core, this is double taxation of the consumer even though the tax is placed at the non-retail level of the supply chain,” said Karen Harned of the NFIB Legal Center. “Predictably the tax will be passed on to the consumer, raise the retail price, decrease demand for retailers, and erode Pennsylvania sales tax collections.”
The industry coalition contends that the Sterling Act prohibits Philadelphia from imposing a tax that functionally duplicates a state tax, falling on the same products, in the same circumstances, and paid by the same people. The effect of the law, according to the brief, serves as a template for local governments statewide to enact similar taxes on the same or other types of products.
“The result will be duplicative and potentially punishing taxation of particular products in certain pockets of the state,” said Harned. “Imagine an enhanced sales tax on candy in one local jurisdiction, fast food in another and snack foods in yet another. Such balkanization is not legal or desirable.”