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Philadelphia's Cigarette Sales to Fall $26 Million Below Initial Projections

City Controller’s latest economic report examines Philadelphia’s Cigarette Tax revenues for FY2017

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PHILADELPHIA Pa. - City Controller Alan Butkovitz today released his latest economic report that indicated Philadelphia’s Cigarette Tax revenues are projected to be almost $26 million below the City’s initial projections for the current fiscal year.PHILADELPHIA Pa. - City Controller Alan Butkovitz  released his latest economic report that indicated Philadelphia’s Cigarette Tax revenues are projected to be almost $26 million below the City’s initial projections for the current fiscal year.

Through the first six months of Fiscal Year 2017 (July through December), the $2-per-pack Cigarette Tax generated $24.8 million for the School District of Philadelphia. Based on the current average monthly collection of $4.1 million, the yearly total is estimated to be $49.6 million.

Prior to the implementation of the tax in 2014, the City of Philadelphia’s Finance Office initially projected Cigarette Tax collections to be $77.5 million in Fiscal Year 2016 and gradually decline to $72.7 million by Fiscal Year 2019. Actual collections for the first three years of the tax have not reached $60 million.

Both the city and state have realized a decline in Cigarette Tax sales. However, when examining sales for the first half of the last two years, Philadelphia has realized a 23 percent decline compared to the state’s 11 percent reduction. If Philadelphia’s smoking patterns were similar to the rest of the state, half of Philadelphia’s decline could be a result of people buying cigarettes outside of the city.

In addition, the lower-than-expected Cigarette Tax revenues resulted in less funding for the School District. To reach the budgeted amount the School District was anticipating this year, monthly tax collections would need to average at least $5 million, a mark that has not been surpassed since the first year the tax was implemented in 2014.  

Along with examining Cigarette Tax collections, the City Controller’s monthly report showed monthly home sales totaled 1,207 in November, a 28 percent increase over November 2015. Home sold in neighborhoods across South Philadelphia accounted for 20 percent of the total monthly sales. Additionally, a high number of sales occurred in Fishtown and Port Richmond, as well as areas across the Lower Northeast.

Total employment across the city was up 13,700 jobs over last November. The Education and Health Services and Leisure and Hospitality industries provided the boost in total annual job growth.

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