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ABA Sues to Stop Soda Tax

Says effort singles out beverages, is unfair to small businesses

PHILADELPHIA -- The American Beverage Association is taking on Philadelphia's recently approved tax on soft drinks with a lawsuit asking a Pennsylvania judge to enjoin and declare the 1.5-cent-per-ounce levy invalid.

The Philadelphia City Council approved the tax on sugar-sweetened beverages, including sodas and juice drinks with less than 50% juice, in June, making it the first major city in the United States to levy a tax on soda. It is scheduled to take effect Jan. 1.

It's expected to raise $91 million in its first year to fund pre-kindergarten programs, better education in grade schools and neighborhood recreation centers, while also encouraging consumers to drink fewer sugary drinks, thus fighting obesity.

The American Beverage Association (ABA), which represents Coca-Cola Co., PepsiCo and Dr Pepper Snapple Group, said in June the tax "unfairly singles out beverages ... but most importantly, it is against the law."

ABA filed the lawsuit Sept. 14, saying the tax violates state law and will "meaningfully diminish the everyday purchasing power of Philadelphia residents," according to a Reuters report. The tax also puts small businesses at a disadvantage, according to court documents.

The tax also violates the terms of a federal nutrition assistance program that sends funds to states, plaintiff counsel Shanin Specter of Kline and Specter told Reuters.

"They end up getting a large chunk of this revenue from the people who can afford it the least," Specter said.

In a statement, Philadelphia Mayor Jim Kenney, a proponent of the tax, said he is confident the city will defeat the lawsuit.

"While it is repugnant that the multibillion-dollar soda industry would try to take away these educational and community programs from the hundreds of thousands of Philadelphians who need them, we were not surprised by their lawsuit given the $10 million they have already spent opposing the tax," he said.

A tax on sugary drinks is already in place in Berkeley, Calif., and soda taxes are under consideration in San Francisco and Oakland, Calif., and Boulder, Colo.

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