Latest Economic Report: Sin & Sweet Taxes Provide Philadelphia with $500 Million

For Immediate Release
Aug. 3, 2017

Contact:  Brian Dries

Sin & Sweet Taxes Provide Philadelphia with $500 Million
City Controller’s latest economic report includes review of Cigarette, Liquor and Beverage tax revenues over the last five years

PHILADELPHIA – City Controller Alan Butkovitz today released his latest monthly Economic Report that indicated Philadelphia’s Sin & Sweet taxes generated more than $500 million over the last five years. This includes revenues from the Liquor by the Drink, Cigarette and Sweetened Beverage taxes.

Of the total revenues collected from Fiscal Year (FY) 2013 through FY2017, $313 million was collected from Liquor Tax revenues, which is a 10 percent tax on the sale of alcoholic beverages at establishments such as restaurants, bars, clubs and hotels. Liquor Tax revenues increased by 40 percent from $52 million in FY2013 to $73 million in FY2017.

“The growth in tourism combined with the ongoing success of beer gardens have contributed to the boost in Liquor sales,” said Controller Butkovitz. “Not only has the City realized the advantages but it has embraced the concept by continuing with its creative ‘Parks on Tap’ this summer.”

The Cigarette Tax, which is a $2-per-pack tax for cigarettes and little cigars, totaled $156 million since it was enacted three years ago. The current year collections totaled $47.4 million, marking a 20 percent decrease over last year. The School District of Philadelphia and the state government entered into an agreement to recover revenues when collections fall short of projections.

“Under state law, if local revenues from the city’s portion of the Cigarette Tax do not reach $58 million, the state will cover the difference,” said Controller Butkovitz.

In addition, the Sweetened Beverage Tax, which adds 1.5 cent per ounce on all sweetened beverages sold in the city, generated $32 million in its first five months from February through June 2017. This was $7 million below budgeted projections.

The Liquor and Cigarette tax revenues are remitted directly to the School District of Philadelphia. The Sweetened Beverage Tax is recorded in the City’s General Fund to pay for programs such as Pre-K, the Rebuild Program, Community Schools and many other services provided by the city.