In the News

Philadelphia Business Journal- January 3, 2017

Soda tax causes sticker shockfor consumers

The start of the New Year brought with it the start of the sugary drinks tax in Philadelphia – and higher prices on sodas and other beverages.

Multiple news outlets reported customers' shock when seeing the actual financial impact of the soda tax, which at least two major supermarket chains made clear in how they advertised their prices.

Acme stores, reported, are putting the soda tax on receipts so it is clear how much of the tax is passed on to customers. The local TV news station also said other retailers – like ShopRite – have updated the price tags on store shelves to indicate the full price.

Some items nearly doubled in price, like this ice tea at a Save-A-Lot location in the city.

The tax, meant to generate millions in funding for the city's beleaguered school system, is imposed at the distributor level. It is up to the beverage companies to pass the cost of the tax onto retailers, which can then pass it on to consumers. The city has long insisted that the beverage industry could take a different strategy to pay for the tax. For example, soda companies could still pass the additional cost burden on to consumers but distribute it across all their products, which includes snacks and other beverages, like bottled water.

Big soda challenged the legality of the soda tax, claiming – among other things – it would impose an additional sales tax on consumers. But a recent ruling from Philadelphia Court of Common Pleas Judge Gary S.Glazer dismissed that idea. The industry, however, appealed the ruling.

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