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January 16 2018

Costco Shocks Customers by Exposing the High Price of Seattle’s Soda Tax

by Patrice Lee Onwuka

Gatorade is a lot more expensive in Seattle and Costco is not shy to tell you exactly why. Customer photos are going viral showing how much the city’s sugary drink tax is hiking the costs of the beverages they buy.

Costco, the national retailer known for selling groceries in bulk at a discount, is being transparent about how much of a price on drinks increase is due to Seattle’s new sugary-drink tax. For example, a 35-count variety pack of Gatorade has a regular Costco price of $15.99, but the new “City of Seattle Sweetened Beverage Recovery Fee” adds a whopping $10.34 to the price so customers will pay $26.33 now.

In another example, a 24-count case of 16-ounce Monster energy drinks has a Costco price of $32.99, but customers will pay $39.71 due to the $6.72 tax.

On January 1, Seattle instituted a new tax of 1.75 cents on each fluid ounce of sugar-sweetened drinks including sports drinks, soda, energy drinks, and kombucha. For bulk retailers like Costco, which families rely on to save money, the price increase is painful.

Customer responses are priceless:

One Costco shopper loaded a case of Coca-Cola into her cart, not noticing the new price until KIRO7 pointed it out. 

“That much!” said Vilma Villagran, who was buying the case for her family. 

The regular case of Coke is now $7.35 more expensive than the Diet Coke or Coke Zero. 

“I knew it was going to be high, but not that crazy high,” Villagran said. 

Costco is exposing a tactic by lawmakers who love to pass taxes – so-called “sin taxes – to discourage certain behaviors and raise revenue. Rarely do customers notice, all they know is that they are paying more than before.

Seattle’s soda fee is a back-door tax on poor people. In general, low-income Americans and minority groups lose more of their money to soda taxes than other demographics. However, this case was worse. Coffee drinks – like those you buy at Starbucks and other coffee shops - were excluded from the final proposal to keep such drinkers from paying an additional tax of about 21 cents for every “tall” cup of espresso. How fair is it that a person who can afford to spend anywhere from $2-5 every day on a coffee doesn't have to pay this tax, but a person buying a bottle of soda for her family gets hit with the tax?

Supporters point to the health benefits as customers may choose healthier options. I guess like water:

“The hope is consumption of the unhealthy product -- which causes heart disease, diabetes -- will go down, the sugary drinks to go down, and we fully expect that to be the case,” [Jim Krieger, who is on the committee for Seattle Healthy Kids Coalition and is the executive director of Health Food America] said. 

However, as long as people have means of transportation they can simply purchase their beverages outside of the city limits, which is good news for stores in nearby towns. For those who can’t afford to travel, they are worse off – stuck with a new tax on their already tight budgets.

Lawmakers aren’t worried about that, they see the money. Seattle expects to raise $15 million from the tax which will go toward healthy eating programs, food banks, and scholarships. However, almost a tenth will go to the city coffers for general administrative costs. The ends justify the means perhaps.

Now that their tax hike is exposed and being felt by residents, lawmakers are scrambling to do damage control. They held a press conference to defend the tax, but the damage is done.

Hopefully, other retailers will find the courage to be transparent as well. Maybe that will prompt consumers to demand better policies from lawamkers that don't put added pressure on their budgets.

 

IIndependent Women's Forum is an educational 501(c)(3) dedicated to developing and advancing policies that aren’t just well intended, but actually enhance people’s freedom, choices, and opportunities. IWF is the sister organization of the Independent Women’s Voice.​
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