Consumers are in shock at price hikes on sugary beverages across Philadelphia due to a Soda tax that took effect Jan 1, and now the mayor is blaming increased costs on businesses.
Mayor Jim Kenney, who lead the charge for the passage of his city’s “soda tax,” is lashing out at the business community over higher prices, even accusing retailers of attempting to stir up resentment for the tax in the community. Kenney is accusing retailers of price gouging, which he says were constructed to undermine the tax and the efforts of local government. Retailers who are charging the tax as a separate line item or who are putting up signs specifically highlighting the cost of the tax to the consumer, are engaging in an attempt to “mislead” shoppers and are “wrong,” according to Kenney, reports CBS Philly.
The contentious soda tax secured passage in June but consumers in Philadelphia are still facing sticker-shock at the actual extent of the price increases. In some cases, shoppers found that they were paying more for the soda tax than the actual product they were purchasing.
“This is what they do,” Kenney told CBS Philly Tuesday. “They spent 10 and a half million dollars in an advertising campaign to beat the tax, they lost. They spent hundreds of thousands of dollars in legal fees and they lost. They’re gouging their own customers.”
The 1.5 cents per ounce tax on sugary drinks is implemented at the distribution level, meaning that retailers must choose how much of the cost to pass onto consumers at the shelves. Some people in the city are getting confused due to the price variations from retailers on different products. Acme passed on the full cost of the tax to consumers, deeming it too costly for the company to absorb. Small corner stores and markets report being hit hardest because they can’t shift inventory like larger chains to offset costs, reports Billy Penn.
“From Jan. 1, it’s been completely dead,” Mohammad Alqtaishat, owner at Roxborough’s M&M Market, told Billy Penn. “I’m not making money at all.”
Some residents said they are going to start shopping for their beverages out of the city to avoid the onerous tax. The mayor continues to defend the tax, arguing it is the choice of the retailers to pass the added costs on to their customers, deflecting responsibility.