Tobacco Tax Proposed in Philadelphia

In Philadelphia’s desperate search for cash, a new tobacco tax can be added to the list of bad proposals meant to close the city’s reported $150 million budget gap—along with a soda tax and trash fee (written about here). Councilman Darrell Clarke plans to introduce legislation to tax chewing and pipe tobacco at 36 cents per ounce and individual cigars at 3.6 cents per ounce.

Border shopping and smuggling is something to consider when taxing tobacco at the state level. And that kind of activity gets easier the smaller the taxing border is. If a lot of people find escaping the tobacco tax easy, it might lead to disappointing revenue for the city.

Like many other states and cities Philadelphia is trying to use politically easy rather than fiscally sound means to fund their spending. Tacking on taxes to unpopular products should not be the solution to mishandled government financing.

Here is a re-cap of state cigarette tax rates—available along with other good tax stats in our 2010 Facts and Figures: