Jesse Jones investigates restaurant outside city limits with soda tax surcharge

KING COUNTY, Wash. — A McDonald's in King County has been giving its customers a little more than extra fries.

Apparently, the McDonald's on Des Moines Memorial Drive South has been charging customers Seattle's soda tax surcharge, when it shouldn't be.

The McDonald's in question has a Seattle address, but is actually in King County. So Jesse paid the location a visit.

After purchasing his drink, he noticed his receipt included a 33-cent surcharge, which is actually higher than Seattle's tax rate of .0175 cents per ounce. So, customers at that location who buy a small soda are being surcharged for a drink size that's closer to medium.

So Jesse Jones wanted to know what was really going on.

Understanding Seattle's soda tax

Seattle's soda tax went into effect Jan. 1. The city said the tax will generate about $15 million in its first year, benefiting social programs including educational programs and extending food stamp benefits.

Advocates say the soda tax will also discourage people from buying sugary drinks, which have been linked to diseases such as hypertension, Type 2 diabetes, heart disease and tooth decay.

Beverage industry workers and others against the tax call it regressive, saying it punishes the poor.

The tax hits distributors first, who then pass along the charge to businesses.

The law says the tax on a 16-ounce soda should be about 28 cents.

Jim Desler represents the Keep Seattle Livable for All Coalition, which includes small businesses that are against the soda tax.

Desler said it was inevitable that the surcharge would push past Seattle city limits.

“We see ongoing complexity, ongoing confusion over what’s taxed, what’s not and the ripple effect going beyond Seattle’s borders,” Desler said. “There is a basketful of unintended consequences that raise real questions and real concerns."

McDonald's response

McDonald's said it's charging for what it calls 'slippage.'

Corporate adds the surcharge to make up for free refills. But this McDonald's has been charging a surcharge to customers buying drinks in the drive-thru. The Des Moines Memorial Drive South location also had signs inside telling customers they were limited to one refill.

After Jesse Jones spoke to corporate officials, the restaurant immediately stopped the surcharges.

A McDonald's spokesperson gave Jesse an official statement, which reads, in part:

"As discussed, it is simply (but unfortunately) an oversight that was immediately addressed. Since Feb. 15, 2018, this particular McDonald's has disabled the surcharge from the register and the fee is now removed from all applicable transactions."

The location operator said in a statement:

“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 McDonald's spokesman said its trying to come up with a way to make things right for its customers. They promised Jesse to let them know what the plan will be.

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