Not National News: Costco Pushes Back Against Seattle's Sugary Drink Tax

The City of Seattle probably didn't expect pushback from Costco, seen by many on the left as retail's "anti-Walmart," after its "sugary drink" tax of 1.75 cents per ounce went into effect January 1. But that is exactly what has happened.

In moves the national press, which largely supports such taxes, has thus far ignored, Costco is itemizing the built-in cost of the tax on its Seattle store's shelf tags, and informing customers that they won't pay the tax if they shop at one of two other Costco stores outside Seattle's city limits.

A January 5 tweet from a reporter at Seattle TV station KIRO7 included a photo documenting both of Costco's moves (HT Rare.us):

SeattleSodaTaxTweetKIRO7on010518

This is, in a sense, a gutsy effort by Costco. Seattle has imposed the tax on distributors, meaning that retailers pay the tax as a line item on their purchases. In theory, retailers then decide whether or not to pass along all or part of the tax to customers in their shelf prices; of course they must, or they will go broke selling these products.

The City of Seattle clearly wanted to keep the amount of the tax hidden from retail customers, and, as seen below, even engaged in the fantasy that the tax burden is not "intended to fall onto the consumer":

SeattleDistributorSodaTax2018

Thus, Costco is risking city fathers' wrath by disclosing the amount of tax built into the customer's full retail cost, and is further inflaming the situation by encouraging customers to visit Costco locations outside of the city to avoid the tax.

Costco is also clearly engaging in self-defense. If, as would be expected, many customers venture outside of Seattle to buy their sugary drinks (diet sodas are exempt from the tax), they will likely do most if not all of their other grocery shopping at the same time. There's obviously no shortage of other grocery stores, so Costco is clearly trying to do what it can to avoid losing a lot of business.

Speaking of exemptions, the tax is not being levied on the types of heavily-sugared coffee drinks found at Starbucks and other similar locales. Thus, the tax regressively targets the poor, who tend to consume more of the taxed drinks. It's also arguably racist, an admission made by the office of none other than now-disgraced former Seattle Mayor Ed Murray in an FAQ document last spring:

Whites and high-income Americans are more likely to drink diet soda compared to communities of color and low-income Americans.

To placate the regressiveness concerns, the city has said some of the tax money collected will "go back and serve the community." But, as has been seen in Philadelphia, where a similar tax has been in effect for a year, it's not an ironclad promise:

... Yet 80 percent of the revenue from the tax will go straight into Seattle's general fund, with no restrictions on how it can be spent. For the other 20 percent, the spending will follow a weak and non-exclusive list of priorities, including the administration of the tax and, perhaps most insultingly, training for workers who lose their jobs as a result of the tax. So even if it made sense to tax low-income Seattleites so that supposedly smarter officials could then give the money back to them in the form of services the government thinks they need, there's no guarantee that the soda tax will do even that.

The most recent result found in a search at the Associated Press on the tax was a "here it comes" item published in late December. Google News searches indicate that there has been virtually no establishment press interest outside the Northwest.

The press is rarely interested in letting its readers know when nanny-state ideas targeting behavior aren't working out as intended.

Cross-posted at BizzyBlog.com.


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