Retailers Blame Price Hikes On Beverage Tax... Even Before It Takes Effect
PHILADELPHIA (CBS) -- Dennis Edward went to Acme in Mt. Airy to pick up some iced tea on New Year's Eve and found the price had gone up. A sign posted nearby read, "To comply with the new Philadelphia ordinance, retail prices include sugar-sweetened beverage tax..."
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Edward, who works at KYW Newsradio and is familiar with the tax, found a few things curious.
There is nothing in the ordinance that requires the tax be passed on to consumers; the price increase was for more than $2.00 whereas the tax, at 1 1/2 cents an ounce, would be $1.92; and finally, it was the day before the tax took effect so neither Acme, nor its distributor, would have paid the tax on drinks already on the shelves.
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Acme has not responded to requests for comment but they are hardly alone in prominently blaming the " soda tax" for price hikes that the tax should not have caused.
"There are concerns that there are businesses that are going to use this as an excuse to collect more money that isn't actually a result of the tax," says Deputy Revenue Commissioner Marissa Waxman.
For price increases that took effect before the tax did, that exceed the increase the tax would have caused or are collected on an exempt product such as bottled water, "That may be a bit of price gouging," she says.
A sign on the vending machine in KYW's Broadcast Center on Spring Garden street attributed price increases to the tax, though they were higher than the tax would have been, and included water.
Photo credit: KYW's Gavin Lichtenstein
Waxman doesn't mind that the retailers are posting signs about the tax.
"Letting folks know about this tax is not a bad thing," she says. "We hope that folks understand what it is, how it works and what we're going to be doing with the revenue raised."
The estimated $90 million a year the tax will bring in is earmarked for universal pre-K, the Rebuild initiative for parks, rec centers, libraries, etc. and expanding Community Schools.
The city has its own website with more information.
She also says the open show of collecting the tax should mean a high rate of compliance with payments to the city.
She says, though, the city is concerned about possible price-gouging and is looking into it but it's not clear it has any recourse.
According to Waxman, something similar happened in Berkeley, when its soda tax took effect. Prices went up not just in Berkeley but in surrounding communities, though they should have been unaffected.
"It may be that retailers are using the tax as an opportunity to add a bit more profit or hike the price on these products without having to take all the blame."
