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Philly’s cigarette tax turns 1: Has it lived up to expectations?

It’s not the best news for the beleaguered School District of Philadelphia.

Want to help the Philadelphia school district? Try lighting up more.

After support from top city officials, the state legislature last year enacted a $2-per-pack cigarette tax here in the city — the proceeds of which would go directly to the ailing School District of Philadelphia on the 10th of each month. The move came in addition to a raised sales tax that had already been put in place.

Today marks a year since that bill went into effect, and the total money raised for the district falls somewhere around $65 million, which comes up nearly $20 million short of what city officials estimated the tax would bring. Here’s a month-by-month breakdown of how much money came in through Philadelphia’s cigarette tax since it was implemented, according to figures provided by the Pennsylvania Department of Revenue:

September numbers weren’t in yet when these numbers were requested from the Department, but assuming they fall in line with what the last several months have brought in, it should put the district millions of dollars short of what it was expected to receive, especially in the first year.

The bill was moved through the legislature largely by former mayoral candidate and Philadelphia state Sen. Anthony Williams, a Democrat who championed the $2-per-pack cigarette tax last year and projected that the tax would bring in the following revenue in its first five years:

FY15: $83.2M
FY16: 77.5M
FY17: 75.1M
FY18: 73.9M
FY19: 72.7M

Those projections were based on a regional health survey that attempted to identify how many adults in the city smoke and how often they purchase cigarettes.

Williams and his office didn’t respond to a request made by Billy Penn to discuss the figures.

Part of the discrepancy in the tax benefit projection could be because they were calculated with fiscal years that run July 1 to July 1 — it’s been a calendar year since the tax was implemented, but not a July to July.

And the city was on track to raise what officials had projected within the first eight months of the tax, especially after the largest sales months fell in October and November of last fall. But then things started to drop; it’s possible people in the city are quitting smoking faster than officials expected they would.

Adult smoking prevalence in Philly was around 25 percent when the cigarette tax was enacted, meaning more than a quarter of a million people in Philadelphia smoked on a regular basis.The Department of Health in 2013 estimated that a $2-per-pack tax in Philadelphia would lead to more people quitting because a pack of cigarettes would be pushing $10 in price — they guessed it would cause there to be 40,000 fewer adult smokers and 1,000 to 2,000 fewer youth smokers.

It was supposed to take some time, hence the slowly decreasing projections in each fiscal year for the first five years of the tax. Officials also estimated that the amount of black market sales on cigarettes (i.e. loosies) would increase as tax rates went up.

The millions of dollars infused into the district each month from the tax — which is a one-time Band-Aid of sorts scheduled to end in 2019 — still puts a dent in the budget deficit the district has stared down for years, especially this year as the legislature continues to drag its feet on enacting a state budget and schools districts across the state have been forced to borrow to make ends meet until leaders can agree on funding.

Before approving the cigarette tax, the state legislature also approved an increased sales tax by 1 percent on Philadelphia residents that brings in $120 million annually to the district.

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