Seattle’s Sugar Tax Drives Up Cost of Dr Pepper by 76 Percent
Many in Seattle are taken aback by the true cost of the so-called “sugar tax” the city recently enacted. The tax of 1.75 cents per ounce of sugar used in beverages has driven up the price of a case of Gatorade at Costco from $15.99 to $26.33—a 65% markup.
Likewise, a case of Dr. Pepper, again from Costco, now costs $17.55 rather than $9.99. That’s a 76% increase.
Costco has been forthright with its customers regarding the price increase, and has recommended shopping beyond Seattle’s city limits if buying in bulk.
John McKay, Costco’s chief operating officer for their Northern Division had this to say:
When it expresses itself as a penny and three quarters, the tax is not a big deal. . . [but] when you multiply it out by many ounces, it becomes a bigger deal. . .
We feel an obligation to let people know what [the tax] is, and let people know it’s only in Seattle. . . Our real intent was to educate members.
Although some have accused Costco of interjecting in local politics, the wholesaler’s comments appear reasonable: prices will go up, and frugal customers would indeed be wise to shop outside of Seattle if buying cases of sugary beverages.
The effect on local businesses is uncertain, but it is reasonable to suspect that at least some savvy shoppers will buy beyond the city limits. For those that cannot, they will either need to absorb the price increase or change their drinking behavior.
Either way, prices will increase for the average person. We’ve seen it time and time again, most recently with Seattle’s minimum wage hike, which has already cost the city thousands of jobs.