Councilman proposes taxing cigars, smokeless tobacco

City Councilman Darrell L. Clarke wants the city to venture where the state has not yet dared to go: the taxing of chewing tobacco, pipe tobacco, and cigars.

Clarke said he would introduce on Thursday a bill setting a 3.6-cent tax on each cigar and a 36 cents-per-ounce tax on loose forms of tobacco. That would mean 43 cents on a typical 1.2-ounce can of chewing tobacco. Snuff is also included, as are rolling papers, at a yet-to-be-determined rate.

Clarke's legislative counsel, William Carter, estimated it would raise between $5 million and $6 million for a city looking for any and all revenues to fill a budget gap of up to $150 million in fiscal 2011.

Although the tax would "not make a significant dent" in the city's $3.9 billion budget, "it's an opportunity that we should fully investigate," Clarke said Wednesday.

Gov. Rendell has proposed the same sort of tax on cigars and smokeless tobacco as part of the state's fiscal 2011 budget. Rendell hopes to raise $50 million annually with the tax.

A similar proposal failed last year except for a new tax on "little cigars," or cigarillos. Clarke's bill would exempt those.

Passage of Rendell's proposal could complicate Clarke's plan, because the city is not allowed to tax products that the state taxes, without state approval.

That's why the city needed the legislature's approval for an additional 1 percentage-point sales tax in the current budget. The city then found itself waiting three months into the budget year before the state passed the legislation as part of its budget in September.

"I'm not going to ask them again for anything in life," Clarke said.

The money would be collected as a business privilege tax, much like Mayor Nutter's proposed tax on sugar-sweetened drinks.

Clarke said there did not appear to be statewide support for the governor's tax, based on opposition from cigar makers. He did not expect opposition to be strong here, he said.

Gary Tuma, a spokesman for Rendell, said he would not count out the Rendell proposal before serious budget negotiations began on the budget, which is due June 30.

"I think it's premature to say how much support there is or isn't," Tuma said.

Altria Group, the country's largest tobacco company, has said a statewide tax on smokeless tobacco and cigars would hurt tobacco farmers and cigar makers.

"In a very difficult economy now is not the time to be considering raising any taxes on hardworking American consumers, especially adult consumers who choose to use tobacco products," an Altria spokesman said late Wednesday. "In today's economy, Philadelphia taxpayers have to watch every dollar they spend. It's time the city's politicians did the same."