Sugary Drink Tax Costing More Than Some Of The Products Themselves
PHILADELPHIA (CBS) -- Today was the first day of PHL Pre-K -- Philadelphia's locally funded Pre-K initiative paid for by the new drink tax. As students arrived at the classroom, some at area stores came down with a case of sticker shock.
This is a tax on sweetened beverage distributors and if they are not able to eat the cost, they pass it down to retailers. While some larger ones may try to absorb some of the cost, many can't -- and their customers won't.
To better understand the sticker shock, take a three liter bottle of discount soda -- that's about 101 ounces.
Taxed in Philadelphia at a cent and half per ounce, that's an additional $1.52 -- in some cases making the tax more expensive than the product itself. Include eight percent sales tax and that bottle priced $1.39, becomes $3.14.
ShopRites in Philadelphia will absorb some of the tax with a special two-week promotion.
"It's our way to help the customer," said Jeff Brown, president of Brown's Superstores.
But some say they fear what the future loss of business will do.
"Actually a few people have left the store due to that," explained Joe Rutter, co-owner of Old City's Rocket Fizz.
Rutter says as a small business they couldn't afford to not raise prices on their artisan sodas.
"It's definitely going to affect us."
Meanwhile, Mayor Jim Kenney's administration celebrated the first day of expanded Pre-K programs thanks to projected revenue from the drink tax.
"We are so excited we have been just thrilled with the Kenney administration's initiative," said Kathy Brown-McHale, president and ceo of SPIN.
6500 Pre-K seats is the city's overall goal -- 2000 are currently being filled.
Still, the question remains -- who will end up footing the bill? At a second location outside the city, Rutter says his customers won't.
"We were going to go somewhere into the Rittenhouse area, possibly University City, but most likely will go outside of the city -- Bucks County or somewhere."
City administrators say that it is up to distributors and retailers how that tax is passed along. The city asks hat if prices of water or other items are affected that the retailer do so with transparency.
