Philadelphia, the nation's largest city with a soda tax, has the right to charge its 1.5-cents-per-ounce levy on sweetened beverages, the state Supreme Court ruled in a bitter defeat for retailers and distributors.
The ruling was a crucial victory for backers of such taxes as cities and states wrestle with the contentious tax that could be good for health and public coffers.
Seattle began collecting its own sweetened-beverage tax in January – weeks after Chicago's Cook County shelved one amid widespread dissent. Last month, California passed a law allowing a soda tax in San Francisco to remain in place but banning cities from passing new ones.
The Philadelphia version of the tax was designed to help fund pre-kindergarten programs, parks, libraries and other services. It raised $79 million last year, but the impact on the cost of soda was not small change. The tax adds about $1 to the cost of a 2-liter bottle of soda. A 12-pack of 12-ounce sodas went up $2.16.
That, says Pennsylvania Food Merchants Association spokesman Alex Baloga, has been even more damaging than opponents expected when the tax went into effect in January 2017. The high cost is enough for some people to stop for soda outside the city, he said.
"They are taking their whole cart with them, definitely shopping for other items, too, when they purchase soda elsewhere," he told USA TODAY.
Supporters of the ruling, however, were ecstatic. "5500 kids in Philly win today. Soda tax for pre-k is legal. Huge!!!" tweeted Donna Cooper, who heads Public Citizens for Children and Youth in the city.
Mayor Jim Kenney issued a statement saying the "decisive ruling offers renewed hope for tens of thousands of Philadelphia children and families who struggle for better lives in the face of rampant poverty."
There have been issues with the tax. Revenue in the first year alone came in about 15 percent below estimates. And in March, City Controller Rebecca Rhynhart revealed that most of the money collected in the first two months of 2018 went into the general fund, not specified programs.
City officials countered that the money was being withheld pending the court's decision. Now the decision is in, and foes of the tax are not happy – and are not giving up.
The Ax the Philly Bev Tax Coalition said it was "disappointed" the court signed off on the "wildly unpopular" tax. The group claims the tax has cost nearly 1,200 jobs and is opposed by 60 percent of city voters.
The group is lobbying for a bill in the state legislature that would ban such taxes.
"It is now up to our elected officials to listen to the concerns of their constituents and provide Philadelphians much needed relief by reversing this tax," spokesman Anthony Campisi said in a statement.
Baloga said some stores in the city have seen beverage sales dip 50 percent, and total sales 10 percent or more. That means cutbacks in hours and even staff.
"This is a 1 percent profit margin business," he said. "Everyone is feeling the impact."