City Controller Finds Cigarette Tax Has Not Delivered As Expected
PHILADELPHIA (CBS) -- An economic report released by the city controller shows cigarette sales in Philadelphia have fallen by 23 percent. Though that may be a good sign for health, the controller says it means less revenue from the cigarette tax. The controller and other city officials differ over whether something similar could happen with the beverage tax.
The city imposed the $2-a-pack cigarette tax two years ago to raise money for schools. Then-Mayor Michael Nutter said at the time that it would provide some $80-million the first year. Controller Alan Butkovitz says it fell short then and has declined since, and he questions whether sweetened beverage tax projections might be similarly faulty.
"I would be concerned we might see the same kind of gap on the soda tax," Butkovitz said.
But Finance Director Rob Dubow rejects those concerns.
"It's a different tax with different behaviors," Dubow said. "So we don't think the cigarette tax will give a good forecast for what will happen with the soda tax."
Dubow notes the state later imposed its own cigarette tax, which caused sales to fall statewide. As part of that process, it guaranteed Philadelphia schools a minimum of $58-million in case of a shortfall in revenue from the tax, so the decline in sales has no impact on the school district budget.