Nutter proposes tax on cigarettes, liquor-by-the-drink to help schools
Mayor Michael Nutter on Wednesday proposed tax increases on cigarettes and on liquor by the drink to raise money for the city’s school district.
Nutter’s proposal includes a $2 tax hike on cigarettes, and an increase on the liquor-by-the-drink tax from 10 percent to 15 percent. Along with plans for improved tax collections, the city expects to raise an estimated $95 million for the school district, which faces a $300 million deficit.
The liquor tax, which is expected to raise an estimated $22 million, would go into effect July 1.
The cigarette tax, which would begin Jan. 1, 2014, is expected to generate $45 million. Cigarettes are not included in the city’s current tobacco tax.
Tougher collections on delinquent real estate, liquor by the drink, lease and occupancy, and school income taxes would result in an additional $28 million, Nutter said.
“I propose these two use taxes, because we have raised general, broad-based taxes twice in the last two years on our residents and business owners and we cannot, and should not, keep asking them for more,” Nutter said.
Superintendent William Hite originally asked for $60 million from the city, $120 from the state and $133 million in union and non-union contract concessions to close the deficit. Hite said this announcement would not change the district’s request from the state.
Hite said he was “thrilled” the city “identified a path” to fixing the budget hole.
Nutter said the city would need a “shared sacrifice” to help fund the schools. “We have to look at this in a comprehensive fashion. Everyone has to be all-in on this one.”
Nutter said there are approximately 280,000 smokers in the city, and 2,100 smoking-related deaths each year, making it the leading cause of death in the city.
The new taxes will require approval from the State Assembly and Philadelphia City Council.