Credit: Wikimedia Commons

If you’re a smoking Netflix subscriber who likes to read E-books and play the lottery, your life’s about to get more expensive.

The state government passed a budget and avoided a long impasse, but ended up with some of the most significant election year tax increases in Pennsylvania in decades. Democrats got what they wanted: Increases in education funding. Republicans kind of got what they wanted: No new taxes on personal income or shale.

But there is a hefty — and pretty, uh, creative — tax package that’s propping up the state’s new budget, including yet another tax on cigarettes and a levy on digital downloads.

Tobacco

Man, it’s getting expensive to be a smoker. The largest single revenue driver for the state’s approved budget is a $1-per-pack cigarette tax on top the state’s pre-existing tax on smokes. So the new state tax on cigarettes is $2.60 per pack, and here in Philly, we have an additional $2-per-pack tax that passed in 2014 and is used to fund the School District of Philadelphia.

Since its inception, the cigarette tax has brought in $58.8 million in the last fiscal year that stretched from July 2015 to June 2016. That falls far short of original projections, which state officials had pegged at $77.5 million for fiscal year 2016 when the city was fighting for its passage.

There was some debate in the state House as to whether or not imposing an additional cigarette tax was disproportionately shouldering the burden of balancing the budget on the state’s poorest residents.

“I thought we lived in a Commonwealth where we’re all in this thing together,” said Rep. Russ Diamond (R-Lebanon). “I don’t believe we should tax 20 percent of the population because 80 percent of the population believes we should,” he said of smokers.

Diamond wondered if assemblymen who support raising minimum wage would vote against this tax. “By the way while taxing the poor people, who’s getting off scot free here?” he asked in session. “The big fat cats, smoking their cigars. There’s no tax on them in this package.”

But the estimated revenue of $431 million a year was enough to get it passed. This represents 57 percent of tax revenue for the package overall.

Philadelphia was granted an interesting provision, though. In the event the additional $1-per-pack cigarette tax ends up driving smoking down in the city so much that revenue for the School District decreases to less than $58 million a year, the Pa. treasurer will transfer state revenue into the local fund to meet that level.

And, last but not least, sorry vapers, but you’re not safe either. E-cigarettes and other devices used for vaping will be taxed at 40 percent of the wholesale price. Smokeless tobacco and tobacco used for rolling your own smokes will be taxed at 55 percent the wholesale price. That’s all expected to bring in an additional $64.6 million.

Digital downloads

Your Netflix subscription just got 6 percent more expensive. In order to bring in an estimated $46.9 million a year, Harrisburg OK’d passing on the state’s 6 percent sales tax to “digital downloads.” That means there’ll be a 6 percent tax on E-books, games, photos, music, videos and streaming services like Netflix and Hulu.

Answering questions in session, House Appropriations Committee Chair Bill Adolph acknowledged that there will challenges enforcing this tax. “With the internet and all the new technology there’s always ways that people can not pay the tax, and obviously the Department of Revenue will have to adjust to these new changes,” he said.

Dan Truitt, a Republican representative from Chester, still had doubts. “Technology today makes it awfully nebulous where it is that you buy things, where it is that you use things, who owns and so forth,” he said. “I’m a little concerned about the unintended consequences of imposing a tax on digital downloads when we didn’t hear about this until literally less than 24 hours ago.”

Yes, apps are included. No, Pokemon Go doesn’t count. It’s already free. The tax will be levied based on the billing address of device, or the billing address of the account when downloaded to a cloud.

The tax goes into effect on Aug. 1, so don’t be surprised if your digital downloads increase in price. And soon.

Lottery winnings

Don’t get too pumped when you win the lottery, because taxes. Now in Pennsylvania, the Personal Income Tax — which is 3.07 percent — will apply to all cash winnings when you play the lottery. That’s expected to bring in $15.8 million a year.

Bank shares

The state’s tax on banks will be increased to 0.95 percent, bringing in an estimated $23.5 milion a year in additional revenue.

Table games

Slot operators will now pay a 16 percent tax on their table game revenue, which was raised from 14 percent. The Department of Revenue estimates the increase will bring in an additional $16.8 million.

Amnesty program

This is big. The state’s projecting it’ll make $100 million (one-time only, people) by granting amnesty to taxpayers with outstanding debts. Basically, there will be a 60-day period TBA when delinquent taxpayers can file their late taxes and only 50 percent of the accrued interest in order to be forgiven. The state launched a tax amnesty program like this in 2010, and some 60,000 taxpayers paid off more than a quarter billion dollars in debt.

Other revenues

The state’s budget is largely propped up by more than $700 million in revenue that’s non-recurring, AKA it’s one-time only. Of that, $149 million is expected to be generated as a result of the state’s new liquor laws, $100 million from estimated revenue related to taxing daily fantasy sports and a $50 million licensing fee expected to be brought in this year from the new casino coming to South Philly.

Billy Penn reporter Cassie Owens contributed to this story.

Anna Orso was a reporter/curator at Billy Penn from 2014 to 2017.