Outreach teams hit corner stores to warn of Philly soda tax

Matthew Batte-Cooper (left) and Steve Horton stop to warm their hands at a barrel fire on South Ninth Street while doing outreach with Community Marketing Concepts. They were working as a beverage tax ground team, visiting corner stores and restaurants in the Italian Market.

Matthew Batte-Cooper walked into Bertolino's Pharmacy, a neon green envelope in his hand and a not-so-welcomed message to deliver.

"Hi I'm here representing the revenue department," he announced. "This is some information you're going to need about the city's beverage tax."

Tom Bertolino, the owner, invited Batte-Cooper in with politely veiled annoyance last week. Bertolino was well aware of the 1.5 cent-per-ounce tax which was scheduled to go into effect Jan. 1. He had just instructed his workers to re-price the drinks in his display cases in time for the new year.

"Coke, Canada Dry, they've sent me sample invoices showing me they're passing it on, so I'm certainly going to charge more because they're charging me. It's a shame. We will sell less," Bertolino said to his visitor and the reporter tagging along.

Batte-Cooper, 25, of North Philadelphia, has heard similar responses for five weeks. His charge is to hit as many of the thousands of restaurants, markets and corner stores as possible to alert sometimes-reluctant owners about the tax's effect on them.

Batte-Cooper isn't a city employee. None of the outreach team members are. They're a group of young, mostly previously unemployed, adults working with Community Marketing Concepts, a marketing consultant group contracted by the city.

CMC in conjunction with a second marketing firm, ab+c, is being paid $423,575 for the outreach work which includes mailers, a website and development and translation of informational materials. The 19 team members get $12 an hour.

Under the new law, distributors - even those outside of Philadelphia - must pay a tax on sweetened beverages sold in Philadelphia. Those distributors must register with the city.

If a store owner chooses to buy from an unregistered distributor, they must pay the tax themselves.

It's all detailed on the website phillybevtax.com and in the packets Batte-Cooper and his team circulated last week as they canvased South Philadelphia.

Layered up for the chilly 40-degree day the team hit bars (fountain soda is taxed) coffee shops (pre-sweetened coffees and teas are taxed) and any place selling sweetened beverages, including diet drinks.

Their friendly delivery was disarming given the material.

"We're not going around in suits, we're just talking to people," said Bree Torain, 24, of West Philadelphia, who wore jeans, a sweatshirt and a jacket.

In brief drop-ins, Torain explains how much a given product will go up if the owner chooses to fully pass the tax on.

Some owners ask her about the lawsuit to block the tax, which a judge threw out earlier this month. Several restaurants and food and beverage associations filed a notice of appeal Dec. 23.

Always on message, Torain reminds owners that the money will fund parks and libraries and recreation center renovations. Sometimes she goes off-script to explain why that goal is personal to her. Her 22-year-old brother was shot and killed on New Year's Day last year. She sees the planned upgrades as a way to improve the city that failed him.

"My brother lacked information on jobs, he wasn't able to find things to do and it was getting him in trouble so even though this is like soda stuff, it's about a little more than that to me because it's about Philadelphia," Torain said in an interview.

At Fruits and Produce in South Philadelphia, Kevin Zou, son of the owner, said the compliance rules are complicated.

"To be honest, it's really confusing because we get some products from companies like Canada Dry or Coca Cola who deliver. Then we go to Restaurant Depot for other stuff," Zou said.

In Zou's case, all three are already registered distributors.

Merchants and distributors are legally bound to accurately report what they sell.

Marisa Waxman, first deputy revenue commissioner, said the city is planning on 10 percent non-compliance the first year, improving to seven percent for the life of the tax.

The city will hire 15 people to help with enforcement, randomly auditing stores to see if reported sales match invoices or industry standards.

Distributors will be fined $1,000 per untaxed invoiced sale. Plus, they will have to pay the skipped tax.

If the retailer did not pay the tax or purchase the beverages from a registered distributor, that business would be fined and liable for the tax.

The city is also fielding questions about whether specific products, like weight loss shakes or baby formula are taxed (yes and no).

Alex Baloga, vice president of external relations for the Pennsylvania Food Merchants Association said distributors have hired their own tax consultants to figure out which of thousands of products they sell need to be taxed.

In stores, merchants who choose to pass the tax on to consumers are deciding whether to change prices on the shelf or at the register.

Too much of a price jump between listed and actual price could lead to consumer protection lawsuits, Baloga noted.

"From everything I know when communicating with our membership, the tax will be passed on in its entirety to the consumer...the only question is the mechanism and configuration," Baloga said. "The Philadelphia customer is going to be getting a harsh surprise in January."

jterruso@phillynews.com

215-854-5506

@juliaterruso