A sign hangs in a ShopRite in Philadelphia.

A sign hangs in a ShopRite in Philadelphia.

Anna Orso/Billy Penn

ShopRite admits Philly stores overcharged for the soda tax

It’s not just sticker shock, the grocery chain’s corporate leadership told Billy Penn.

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It’s not just a case of sticker shock.

ShopRite, one of the largest grocery store chains in the city, admitted to Billy Penn today that some items in its stores were mislabeled this week and customers may have been erroneously charged a sugar-sweetened beverage tax on items they shouldn’t have been.

The Philadelphia sugar-sweetened beverage tax that went into effect this week has led to confusion for both consumers and stores about which items are subject to the tax, who pays that tax and why consumers across the city have seen signs indicating a sugary drink tax on items like 100 percent juice, mineral waters and even condiments.

Karen Meleta, a spokeswoman for ShopRite, said its stores went through a laborious process of identifying some 4,000 items subject to Philadelphia’s 1.5 cent-per-ounce sugary beverage tax that went into effect Jan. 1. During that process, it missed some items that should have been taxed. And it taxed some items — including mineral water and a marinade — that shouldn’t have been.

She said any ShopRite customers who believe they were charged tax on an item erroneously should come back to the store and speak with customer service representatives.

“It’s been quite a process and the law had some confusing aspects to it,” Meleta said. “We went back and forth with the city for clarity on a number of things.” She added that the stores are currently in a “transition period” and hope problems will be “ironed out” in the coming weeks.

Dozens of people have lamented on social media that larger grocery stores in the city are charging a beverage tax on items they were under the impression weren’t taxed. Two Billy Penn readers sent us these photos of a tax tag on what appears to be 100 percent juice (which is not taxed unless it has added sugar) and hot sauce (which is not at all a beverage):

sauce_OJ
Photos via Heather Willberiley and Sharon Kosman on Facebook

What fruit juices are taxed seems to be causing the most confusion among consumers in the city. The sugar-sweetened beverage tax that was passed by the city last year and went into effect Jan. 1 stipulates a 1.5-cent tax on any non-alcoholic beverage that lists a sugar-based sweetener or artificial sugar substitute as an ingredient. It also taxes any syrup or concentrate with the same ingredients that’s intended to be used in the preparation of a beverage.

Largely, that means things you’d think of: Soda. Diet soda. Kool Aid. Energy drinks. Those bottled Frappuccinos from Starbucks. You know, the really sugary stuff.

But it also means very specific types of fruit juices, and it comes down to labeling and ingredient lists to discern which juices are actually taxed by the city. The law stipulates any product that’s more than 50 percent fresh fruit, vegetables or a combination of the two is exempt from tax.

That’s why some folks have been confused by tags, specifically at ShopRite, indicating 100 percent juices with no added sugar are subject to the beverage tax. For example, the ShopRite on Aramingo Avenue placed a tag indicating a beverage tax on a drink that’s 100 percent pomegranate juice and has no added sugar:

"Just Pomegranate" juice is taxed under the sugary sweetened beverage tax at a ShopRite in Port Richmond, despite its ingredients including just filtered water and juice concentrate.

"Just Pomegranate" juice is taxed under the sugary sweetened beverage tax at a ShopRite in Port Richmond, despite its ingredients including just filtered water and juice concentrate.

Anna Orso/Billy Penn

Same for this V8 juice:

V8 100 percent vegetable juice is taxed at a ShopRite in Port Richmond.

V8 100 percent vegetable juice is taxed at a ShopRite in Port Richmond.

Anna Orso/Billy Penn

Look around the juice aisle, and you’ll start realizing a pattern. ShopRite was indicating it was charging a beverage tax on any juice item that came “from concentrate,” even if that concentrate didn’t have any added sugar. That shouldn’t always be the case.

Lauren Hitt, a spokeswoman with Mayor Jim Kenney’s administration, said beverages containing fruit or vegetable juice concentrate and no other sweetener are only taxable if labeled as containing “added sugar.”

Isabel Maples, a registered dietitian in the Washington, D.C. area and a spokeswoman for the Academy of Nutrition and Dietetics, said juice that is 100 percent pure but from concentrate should not fall under Philly’s sugar-sweetened beverage tax. Juices from concentrate have water and other ingredients taken out for the storage process and added back later on. The concentrate process does not mean sugar or artificial sweeteners have to be added.

“If it’s a (100 percent pure juice) from concentrate and water has been added to it,” Maples said, “it’s still 100 percent juice.”

Hitt noted the FDA has recently expanded its guidelines on which products had to list “added sugar,” and recommended distributors review FDA guidelines to determine which of their products fall under the updated “added sugar” definition.

Meleta said there was some confusion among ShopRite stores about which juices are subject to the tax, but there’s been “a resolution” to that. However, she indicated it’s possible that before that resolution, there were 100 percent juices from concentrate with no added sugar that were taxed.

To make it easier for consumers, Hitt said the city is in the process of compiling a list of tax-exempt 100 percent juices.

But here’s the thing with the Philadelphia sugar-sweetened beverage tax law: It’s not a tax levied on consumers at the cash register. It’s a tax levied on beverage distributors that’s then passed onto grocery stores and consumers from there. So technically, if ShopRite wanted to label higher prices on all the food in its store due to the beverage tax, it could do so.

That goes back to one of the original debates about the tax itself. Opponents argued that it’s essentially a grocery tax, saying stores would raise their prices in a blanket fashion to cover increased costs because of the tax instead of just eating the loss or taxing only items that distributors were taxed for. Proponents said that wouldn’t happen.

Meleta said a rise in prices across the board is exactly what it’s been trying to avoid by labeling every one of the thousands of items subject to the beverage tax.

“We are not trying to spread it throughout other items,” she said. “It took a lot of effort and a lot of time to do that because we do it not only on the register receipt, but also on the shelf. And we are committed to transparency so that we would not have to do that.”

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