With revenue lagging, higher cigarette tax eyed in Pennsylvania


By Andrew Staub | PA Independent

HARRISBURG, Pa. — Some state lawmakers have eyed a severance tax on natural gas extraction as the revenue hero that could swoop in at the last-minute to save Pennsylvania’s struggling budget.

But could it have a sidekick, too?

Monday, state Sen. Anthony Williams, D-Philadelphia, raised the possibility that hiking the state’s cigarette tax to $2 a pack has bipartisan appeal and, like a severance tax, could be gaining traction.

When paired with the severance tax — which Senate Minority Leader Jay Costa, D-Allegheny, believes could raise $700 million — a higher cigarette tax could go far in helping plug a budget deficit that could be out of balance by $1.7 billion next year, thanks in part to lagging revenue.

TOBACCO TAX: Pennsylvania has a budget problem, but Democratic lawmakers say a higher tax on cigarettes is gaining traction and could net $200 million annually.

A 40-cent increase to the cigarette tax could bring in $200 million, even with an anticipated 15 percent drop in sales because of the more expensive tobacco, Democratic staffers said.

“It’s another one of those revenue options that are on the table,” Costa said.

Asked about the possibility of a cigarette tax, Erik Arneson, a spokesman for Senate Majority Leader Dominic Pileggi, R-Chester, said, “It’s too early to start speculating about any specific idea.” He said GOP lawmakers this week would talk about a budget sans a revenue increase.

“Beyond that, I can say that everything’s on the table,” he said, adding a caveat. “Nothing is final, no decisions have been made.”

Steve Miskin, a spokesman for the House GOP, said members haven’t discussed a cigarette tax. Instead, representatives are examining every line item, considering the future viability of some tax credits and again focusing on the possibility of privatizing the state’s liquor stores for a jolt of revenue, he said.

A severance tax, despite having bipartisan support in the state and state Senate, is something of a longshot. Republican Gov. Tom Corbett has been adamant in his opposition to further taxing the drilling industry.

The state’s revenue was $108 million below estimates in May, leaving the current fiscal year shortfall at $612.5 million after adjusting for a transfer of liquor store profits. Lawmakers have until June 30 to pass a budget for 2014-15.

Staub can be reached at Andrew@PAIndependent.com. Follow @PAIndependent on Twitter for more.