Imagine paying $8.03 for this 8-pack of Lipton Diet Green Tea that normally costs $4.99.
With 14 Democrats and 3 Republicans, the City Council’s vote was — SURPRISE! — 14-3.
The proceeds from the soda tax ostensibly will go to expand “early childhood education”. It is expected to raise about $91 million annually to be spent on expanding prekindergarten programs in the city; creating community schools; improving parks, recreation centers, and libraries; and offering a tax credit for businesses that sell healthy beverages.
Philadelphia’s 1.5-cent-per-ounce soda tax, the first such tax imposed in a major U.S. city, affects thousands of products – essentially anything bottled, canned, or from a fountain with either sugar or artificial sweetener added, with a few exceptions. That means a 12-oz bottle of regular or diet soda will have 18 cents added to its retail price, in addition to what Philadelphia (2%) and the state of Pennsylvania (6%) charge as sales tax.
That doesn’t sound too bad until you look at the receipt below, for a 10-pack of Propel Zero Berry Water Beverage Powder Mix (source: The Burning Platform).
The 10-pack was on sale for $5.99, $1 less than its regular price.
The beverage tax was $3.04, which is 51% of what the 10-pack costs (51% of $5.99 = $3.04).
Then add $0.72 sales tax, and the total cost of that 10-pack of flavored water comes to a whopping $9.75.
But if you had bought the same 10-pack a day ago, on December 31, you would have paid only $6.47 ($5.99 + 8% sales tax of $0.48). Today, however, the 10-pack costs you $3.28 more because of the beverage tax.
Chuck Andrews picked up a $1.77 gallon jug of tea, got home and looked at his receipt. He said: “When I read the receipt I’m like, ‘Wait a minute. I paid more in tax than I did for the product!’”. The tax on the $1.77 gallon of tea was $1.92 cents.
Philadelphia’s small businesses are getting an earful from customers about the higher prices and wonder what this will mean for their future. “The businesses take a hit with profits, the customers take a hit with payment, and it’s kind of a lose-lose in Philadelphia with this tax,” Mike Maziarz of Franzones said.
Many people are saying they will go out of Philadelphia rather than pay the hefty soda tax. Others, like Carl Saulsbury, say they will change what they buy: “So now I know. I’m buying water, water, water.”