Feb 13, 2018

Seattle Soda Tax Puts the Freeze on Small Business Revenue

Seattle’s government passed a soda tax in July of last year that went into effect on January 1st. The tax charges soda distributors 1.75 cents per ounce of sweetened beverage and, according to former mayor Ed Murray, is intended to encourage healthier consumption habits and generate enough revenue to subsidize community colleges and farmer’s markets.

These intentions, however, are dishing out some harsh realities for Seattle citizens in the form of massive price hikes. A typical can of Coke now costs 20 extra cents. The charges add up even more when buying bulk. A 36-can case of soft drink is now $7.56 more expensive, almost double the initial price at many retail outlets.

Big businesses like Costco have printed disclaimers on their bulk soda items directing customers to travel to other locations for more reasonable prices: “this item is also available at our Tukwila and Shoreline locations without the City of Seattle Beverage Tax.” Disclaimers are fine and dandy for big businesses with tons of locations but for small business owners, the outlook is a bit more gloomy.

Pizza Mart owner Jagajit Singh Samra says he’s lost customers to stores in the neighboring city of White Center, which doesn’t impose a beverage tax. This has done some serious damage to his bottom line, “we barely make a living as is, so I don’t know why they’re going after small business. I have no idea.”

Other business owners have shared similar stories: “My soda is like $2.49. If I double it, that’s like $5. That’s like the price of the burger,” says the owner of Seattle’s own 206 Burger. Many of these business owners weren’t even aware the tax was imminent until they received letters from their soda distributors about insane price hikes.

For Samra, this meant paying nearly double the price for a $200 drink order, “so where am I going to get another $200? Because I don’t make that much money.”

As business owners continue to feel the impacts of the soda tax, many will be left struggling to keep the doors open. They can only hope that Seattle citizens will keep coming in to support their businesses or that the government will reverse the tax altogether. So far, it’s not looking like either will happen.

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About the author

Andrew Mosteller
Andrew Mosteller is a freelance writer and regular contributor to Lendio News. His upbringing in an entrepreneurial family nurtured a passion for small business at a young age. Andrew's father, an equity fund manager, taught him the ins and outs of investment financing. Now, Andrew spends his time writing copy for business owners, helping them expand and advertise their unique brands. He's also studying Strategic Communications at the University of Utah. When Andrew's fingers aren't glued to the keyboard, he spends his time reading, podcasting, composing music, and bombing down the ski slopes.

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