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Jesse Jones investigates restaurant outside city limits with soda tax surcharge

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A King County McDonald’s was giving its customers a little more than extra fries.

It seems the fast-food restaurant was charging customers for a soda tax surcharge when it shoudn’t have.

The McDonald’s in question is located on Des Moines Memorial Drive South.  It has a Seattle address, but it is actually in King County.  A gas station and a grocery store located next door weren’t charging customers extra to cover Seattle’s sweetened beverage tax.  So I wanted to know why McDonald’s was charging it.

“We see ongoing complexity, ongoing confusion over what’s taxed, what’s not and we see the ripple effect going beyond Seattle’s borders,” Jim Desler said.

Jim Desler represents small businesses against the tax in the Keep Seattle Livable for All Coalition. Desler said what we are seeing at McDonald’s was inevitable.

“There are a basket full of unintended consequences that raise real questions and real concerns,” Desler said.

The tax hits distributors who then pass the charge along to businesses.  But it’s only supposed to be charged to those in city limits.

I also noticed something else interesting on my receipt.  The surcharge at this McDonald’s is higher than the actual tax rate of 1.75 cents per ounce.

The law says tax on 16 oz. of soda, a small drink at McDonald’s, should be 28 cents.  I paid 33 cents for a surcharge for a small soda.

So customers buying a small are being surcharged for a drink size that’s closer to a medium.  McDonald’s said it’s are charging for what it calls slippage.  Corporate adds to the surcharge to make up for free refills.

But this McDonald’s was charging the surcharge to customers who bought drinks in the drive-thru.  The restaurant also had signs telling customers they were limited to one refill.

As for its geographically challenged surcharges, McDonald’s said its distributor mistakently charged the restaurant for the tax and it just passed the cost to customers.

After I spoke to corporate about the issue, the restaurant immediately stopped the surcharges.

A McDonald’s spokesperson gave me the following statement, in part:

“As discussed, it’s simply (but unfortunately) an oversight that was immediately addressed. Since 2/15/18, this particular McDonald’s has disabled the surcharge from the POS (register) and the fee is now removed from all applicable transactions.”

“The surcharge is designed to make the effect of the syrup tax on my restaurant cost neutral. Because my cost for the tax is based on the amount of beverages that the syrup can make (not just what is sold), the surcharge also covers spills, refills and other losses.” 

A spokesman for McDonald’s says it is trying to come up with a way to make things right for its customers.  They promised to let me know what that plan will be.

 

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