I don’t smoke.
But hiking cigarette taxes a buck a pack strikes me as discrimination against a minority portion of the electorate.
Even if it is phased in over two years.
How will Illinois rank with other states once the per pack taxes reaches $1.98?
The only border state that won’t draw new customers is Wisconsin, where the tax is already $2.52 per pack, according to the Tax Foundation.
Below, Jim Tobin, the man who ran as Lt. Gov. when I ran for Governor in 2002 on the Libertarian Party ticket evaluates the effects of the proposal:
Once again, the greedy tax-and-spend Springfield politicians are planning to drive business and jobs out of our state, this time with Senate Bill 44. This proposed legislation will raise the state cigarette tax from $0.98 to $1.98 a pack.
On top of this projected $1.98 per pack Illinois cigarette tax, Cook County’s cigarette tax is $2.00 per pack, to which Chicago adds $0.68 per pack and Evanston adds $0.50 per pack. Plus, the federal tax was upped to $1.01 last year. More than 40% of the Illinois population will see cigarette tax rates higher than $5.00 per pack if they pass Senate Bill 44.
High taxes on items such as cigarettes encourage people to shop across state lines where taxes are lower. The passage of Senate Bill 44 would place Illinois at a competitive disadvantage to the surrounding states of Missouri ($0.17/pack), Kentucky ($0.60), Indiana ($0.995), and Iowa ($1.36).
In Chicago, where the 10.25% sales tax rate also applies to cigarettes, one pack will sell for almost $10.00 under this proposed legislation. That kind of tax gouging not only drives economic activity out of Illinois, it invites more illegal black-market activity in—and everyone pays for the increased criminal activity this will bring to the state.
In 2004, Illinois tobacco tax revenues were $760 million, but in 2009 they were only $582 million. That is a decline of $178 million over those five years during which Cook County and Chicago raised their cigarette taxes. Clearly there is no assurance that the tax revenue generated by an increase would meet the projected revenue. In fact, a Reason Foundation study of cigarette tax increases across the US showed that 68% of cigarette tax hikes fail to meet revenue projections.
Because raising state taxes on tobacco actually results in lower tax revenues over time, even non-smokers end up paying more. Non-smokers currently pay $178 million per year to make up for lost revenue from past cigarette tax hikes.
I have sent a letter to every Illinois representative recommending they oppose SB0044 which guarantees a 100% cigarette tax hike. Please help me keep the pressure on by also contacting your state representative. The harm that a tobacco tax increase will cause Illinois is clear: fewer jobs and less business. Illinois needs lower, not higher, taxes!
Jim Tobin, President, National Taxpayers United of Illinois
P.S. If you need help finding your state representative call (217) 782-4141 or (312) 814-6440.