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Am I Getting Charged Sales Tax on the Soda Tax? Philadelphia's Beverage Tax Receipts Explained
 
  by: iradioal - Philadelphia, PA
started: 01/05/17 1:36 am | updated: 01/05/17 1:36 am
 
The beverage tax just unleashed on Philadelphia as of the new year may have caught you by surprise. Consumers are experiencing a bit of sticker shock when purchasing their favorite beverages at the supermarket or corner store. Some discount sodas and other sugary drinks end up being double their normal price after the 1.5 cent/ounce tax is added on. You may have stared at your receipt trying to figure it all out and said, "Wait a minute, Am I getting charged sales tax on the soda tax?! That's going too far." The answer is yes and no.

Technically, we as consumers aren't being taxed for beverages. The new Philadelphia beverage tax is levied directly on the beverage distributors. Those distributors sell in bulk to retailers around the city. The distributors are passing the cost of the tax along to the retailers. Most retailers, which sell to us, have decided to also pass the cost along to it's customers. However, most retailers want us to know what's going on with the pricing and have created a line item on receipts for "Philly Bev Tax" broken out from the usual price of the product. The full, taxable price of the product is the combination of both line items. It is just shown that way for consumer clarity on the new prices.

So, am I getting charged sales tax on the beverage tax? Yes, you are paying sales tax on both the normal product price and the passed-on beverage tax that shows up on your receipt. However, at that point it is no longer a tax, it is built into the cost of the product. It has already been paid and passed through multiple hands. Therefore, no, we aren't directly paying a tax on a tax. It certainly feels that way though.

Look at these two receipts from purchases this week of cases of beverages. The top receipt shows an item priced at $12.94. It has $7.20 in beverage tax for a subtotal of $20.14. 8% tax is $1.61. That sales tax includes the item and beverage tax. If the sales tax only included the item it would have been $1.04. The second receipt is similar. $5.99 for the item, bev tax $3.04, subtotal is $9.03, sales tax is $.72. Including just the item it would have been $.48.

 
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