A case in the Pennsylvania courts is challenging Philadelphia’s recent enactment of a 1.5-cents-per-ounce tax on the distribution of sugar-sweetened beverages (SSBs). At stake in Lora Jean Williams v. City of Philadelphia is whether the city is authorized to tax the distribution of a product that harms public health.
The city’s law affects any drink containing a sugar-based sweetener, such as natural sugar and high fructose corn syrup, as well as any drink containing an artificial sugar substitute. Exempt from the tax are products containing more than 50 percent milk, fresh fruit or vegetables, along with some unsweetened drinks to which sugar is later added.
An amicus brief filed by the AMA and 14 other public health stakeholders argues that Philadelphia is within its right to enact laws for the public’s health and welfare.
“These taxes are a well-established tool of local and federal governments alike; they are just new to soda,” the brief says. “The plaintiffs attempt to paint the city’s basic tax on the distribution of a harmful product as an unlawful power grab preempted by state law. But it is their position … that would upset the balance of state and local governance.”
“Their legal theory would invalidate not only this tax, but potentially many other taxes and nontax initiatives that further public health and welfare by encouraging citizens to reduce their consumption of unhealthy products.”
The brief puts forth three key arguments.
Overconsumption of SSBs is associated with increased health risks. The risks begin with obesity and its attendant harms, but they do not stop there. They also include heart disease and type 2 diabetes. Sugar can also cause dental caries, the single most prevalent chronic disease in the U.S. Tooth decay affects 42 percent of American children, 59 percent of adolescents and 92 percent of adults.
The primary source of sugar in the American diet is sugary drinks. A 12-ounce can of cola, for example, contains more than eight teaspoons of sugar.
Philadelphia is plagued by chronic diseases caused by overconsumption of SSBs. “These problems are not unique to Philadelphia,” the brief says, “but Philadelphia unfortunately leads the way—with some of the worst public health outcomes among large cities for heart disease, diabetes, obesity and other diseases caused by SSBs.”
Philadelphians consume about a half liter of SSBs per person per day. In addition, Philadelphia has the highest premature cardiovascular mortality rate and the highest rate of adult diabetes of the 10 largest cities in the country. It also has the highest rate of obese adolescents among the 10 largest cities, nearly double the nationwide rate.
The sugar industry’s arguments would thwart the city’s basic ability to govern for the public’s health and welfare. The plaintiffs argue that the sugar tax is duplicative of a state retail tax. However, the brief argued, taxes by the state and local governments are allowed on the same subject matter as long as they have a different “operation or incidence.” If the court were to adopt the plaintiffs’ views, it would severely limit the city’s ability to tax harmful products or transactions—a basic tool of local government to raise revenue, account for negative externalities and influence consumer behavior.
In addition, the plaintiffs argue that the tax is preempted because it interferes with the Pennsylvania sales tax. According to the plaintiffs, the SSB tax will decrease consumption and, therefore, undermine the state’s ability to pass annual budgets. But adopting this rationale would invalidate myriad local nontax measures—such as public school nutrition outreach and menu-labeling laws—designed to curb the use of unhealthy products, which the commonwealth taxes.
Lastly, the plaintiffs argue the tax is “imposed directly on the sale of many beverages that may be purchased with federal food stamps,” decreasing the buying power of Supplemental Nutrition Assistance Program (SNAP) recipients and putting the state out of compliance with federal standards. However, the brief counters, the tax is not imposed directly on SSBs; it is imposed on beverage distributors.
Berkeley, California, was the first U.S. city to impose a tax on SSBs, in 2015. Philadelphia enacted its sugar tax in 2016, and since then six other cities and one county have followed suit.
The AMA has policy supporting state health agencies’ efforts to educate SNAP recipients in healthy beverage choices; promoting the consumption and availability of nutritious beverages as a healthy alternative to high-calorie, low nutritional-content beverages; and improving the nutritional value of snack foods available in primary and secondary schools.