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Drink up: In Philadelphia, beer is cheaper than soda thanks to beverage tax

By   /   January 10, 2017  /   News  /   No Comments

Philadelphia’s new beverage tax has resulted in non-alcoholic drinks costing more than beer, in some instances.

The Tax Foundation, an independent tax policy research organization, pointed out that after the new tax went into effect Jan. 1, customers experienced sticker shock.

The beverage tax, which at 1.5 cents per ounce is 24 times the amount that is levied on beer, is applied not just to sugar-heavy sodas, but also such beverages as fruit drinks, sweetened iced tea and juices that contain less than 50 percent real fruit. Even some drinks that have no sugar, such as diet sodas, are taxed.

Tax Foundation/Bill Rickards

STICKER SHOCK: In Philadelphia, it’s now cheaper to drink beer than many non-alcoholic drinks.

The Tax Foundation recently discovered that a 12-pack of Propel energy drink costs $9.04 in one Philadelphia store thanks to a beverage tax of $3.04, while a 12-pack of Icehouse beer is $7.99 after the beer tax is applied. (That’s with a discount: the Propel normally sells for $6.99 in the store, meaning at regular price it would be $10.04 with the new tax applied, making the gap even wider.)

Author Scott Drenkard also pointed out that in some cases the beverage tax is nearly as much as the cost of the beverage, noting that a 12-pack of store-brand root beer retails for $2.99 and has imposed on it a new sugary tax of $2.16.

The sky-high excise taxes have some city consumers vowing to shop outside the city’s borders:

The Philadelphia beverage tax was one of several new taxes imposed on Pennsylvanians in 2017, already one of the most heavily taxed states in the nation.

RELATED: Happy New Year? Five tax and fee hikes for Pennsylvanians in 2017

The owner of a Philadelphia supermarket told Watchdog.org in June he feared the tax could cause businesses like his to lose customers, as residents drive to stores just outside the city limits to avoid the hefty tax.

RELATED: Problems abound for Philly’s new soda tax: ‘Most people have cars’

Philadelphia hopes to reap about $91 million annually from the new tax, allocating half the money toward an expansion of preschool programs.

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Johnny Kampis is National Watchdog Reporter for Watchdog.org. Johnny previously worked in the newspaper industry and as a freelance writer, and has been published in The New York Times, Time.com, FoxNews.com and the Atlanta Journal-Constitution. A former semi-professional poker player, he is writing a book documenting the poker scene at the 2016 World Series of Poker, a decade after the peak of the poker boom. Johnny is also a member of Investigative Reporters and Editors.