The city’s smokers emitted a collective phlegmy cough of disgust last spring, when Mayor Gavin Newsom proposed and city leaders approved a 20-cent per-pack tax on cigarettes. Cigarette butts comprise an inordinate chunk of the detritus de-beautifying our pristine streets; hence the tax would pay for the time workers spend picking up said butts.
But this is the City That Knows How… to lose money when it taxes cigarettes. The city budgeted $4.5 million in revenues from the tax, but have collected only $300,000 thus far, while meanwhile paying workers and spending as if it would have $4.5 million. In a best case scenario, the city thinks it will collect about 25 percent of the taxes it expected to collect, according to a controller’s report.
Meaning? The city will have to use $3.4 million from its general fund — money that’s needed to pay for police, firefighter and recreation director salaries — to cover the difference in the cigarette abatement fund. That $3.4 million will be spread among six departments.
“I guess the city hasn’t collected as much as it expected,” said Supervisor John Avalos, chairman of the Budget & Finance committee.
Yes folks — the city has lost money on the cigarette tax.
The Treasurer/Tax Collector says it has only collected taxes from about 35 percent of city merchants, according to the report, meaning the outlook could become rosier by the end of the fiscal year in June.
A claim in San Francisco Superior Court contesting the fee — a precursor to a lawsuit — was also filed in January.