Phila. Cigarette Tax Levied on Non-Philadelphia, Non-Smokers

Since Philadelphia residents aren’t buying enough cigarettes, taxpayers across the state will chip in millions to fund Philadelphia schools.

Huh? Julie Shaw of Philly.com attempts to make sense of it:

Tax revenues from Philadelphia’s $2-per-pack cigarette tax for this fiscal year are projected to be almost $26 million lower than initial projections, according to the City Controller's Office.

But the Philadelphia School District says the shortfall is not expected to put the district at risk.

…

According to a state provision, if local revenues from the city's tax do not reach $58 million, the state will cover the difference.

The upshot? "There's no risk to the school district," Uri Monson, the district's chief financial officer, said Wednesday.

No risk to the school district—because the entirety of the risk falls on other Pennsylvanians. As CF has written before, tobacco taxes are unstable and incentivize smuggling. Worse, they fall hardest on low-income residents.

Let this be a reminder to school boards and local governments: Limiting and prioritizing spending is always a better solution than raising taxes.

What’s the bottom line? A tax promised to fall on cigarette smokers will effectively be levied on non-smokers from outside of the city. And as for the state budget shortfall? It may have just grown by $8.4 million.