WITH THE proposed 3-cent-per-ounce sugary-drink tax on the table to fund universal pre-K and a couple of other things, I took a trip back in time to look at the $2-a-pack tax on cigarettes that began in October 2014.
There are two questions: First, did it produce the expected revenue? Second, what was the effect on sales?
The first was easy to answer, the second less so.
I was not a fan of the $2-a-pack tax, and not just because I was a smoker.
Acting on principle, I quit smoking after the $2 tax was imposed. That was good for my health (discounting the 25-pound weight gain), but bad for the schools, which lost potential revenue from me and others who quit.
More revenue was lost by smokers buying their cigarettes across the city line, or as illegal loosies, but I'm getting ahead of myself.
I dislike taxes targeting a specific industry to pay for services that we, as a society, should shoulder. In his desperation, Mayor Kenney demonized "Big Soda," as if that industry was stealing from children by fighting added taxation.
I also have a moral objection to piling extra tax burdens on those clinging to the bottom of the socioeconomic ladder. That's where most smokers hang out. Soda drinkers, too. The extra 1 percent sales tax Mayor Nutter brought to the city in 2009 also falls heaviest on the poor.
It is not courageous for politicians to target specific industries - it is cowardly. They lack the nerve to tell all the citizens this is a civic benefit and we must all pay for it.
Former Mayor Rendell said he, too, dislikes the soda tax and other so-called sin taxes.
Another group of "sinners" bore the brunt of the stiff, 10 percent-a-drink tax launched in 1995, to benefit schools. Such specialized taxes "for the children" keep growing while the financial hole keeps deepening. Is this the best we can do?
Now, the numbers.
The figures show - hooray - that the tobacco tax seems to be bringing in more than expected.
This is a little tricky because there was more than a single estimate, I was told by School District chief financial officer Uri Monson, who wasn't here when the tax was planned and implemented. "Apparently when they were first adding the tax, the city said you'll get $35-40 million, the state said $75 million," so the district decided "to play it safe and figured $48 million," which turned out to be pretty close.
The Department of Revenue said an early, initial estimate was $69.8 million, later lowered to $42.3 million from the cigarette tax for fiscal year 2014-15, I was told by department press secretary Kevin Hensil. "The actual collection was $51 million," 19 percent more than expected.
Looking ahead, Monson expects $55.9 million in the fiscal year ending June 30, 2017, $54.2 million in the fiscal year ending June 30, 2018, and $53.3 million in the fiscal year ending June 30, 2019, which will be the last year of the "temporary," five-year tax, unless it is renewed. It's a safe bet it will be, because not having it will blow "a $100 million hole in the district's five-year financial plan," Monson said.
Rounding up tobacco sales figures was more challenging because no public entity keeps those statistics. In the Age of Google, it is surprising and dispiriting not to be able to get every question answered instantly on demand.
"No baseline exists to make this calculation since the volume of cigarette sales in Philadelphia prior to the tax is unavailable," said Revenue spokesman Hensil.
"Cigarette taxes are imposed at the wholesale level," he added, making it impossible to track the volume sold at retail in each county.
The best estimate I got came from the National Association of Convenience Stores.
"Philly could have lost 40 percent or more of its cigarette volume," said vice president Jeff Lenard, extrapolating from figures developed by the economic consulting firm Orzechowski & Walker.
"It also looks like Pennsylvania may have lost 15 million to 22 million packs in fiscal year 2015 due to the Philly tax," he said, guessing the business went to New Jersey, or out-of-state smokes were smuggled in. In high-tax New York City, he said, it's estimated that "more than half of all cigarettes" are purchased from illegal vendors.
Pennsylvania sales dropped 4.3 percent in fiscal year 2015 compared with a less than 1 percent drop for the nation, he said.
The bottom line: Tobacco tax revenues went up, we know how much. Sales went down, we don't know how much.
The same might happen with the soda tax, but nobody knows for sure.