Thursday, April 30, 2009

Illinois cigarette tax hike looms

Today was the busiest news day for me since then-Illinois Governor Rod Blagojevich was arrested.

But a story from Wednesday's Quad City Times about Illinois' proposed cigarette tax hike still managed to catch my eye.

Lawmakers set up what could be a final vote before Illinois taxes on cigarettes are raised by $1 per pack.

A House committee voted 4-3 Wednesday to approve legislation that would raise the tax by 50 cents in September and 50 cents more a year later. All Democrats on the panel voted for the increase, and all Republicans voted against.

Democrats favor the tax increase, Republicans oppose it. 'Nuff said.

Earlier this month the federal government increased its tobacco levy by 62 cents.

Being the Marathon Pundit, I'm not a smoker. But the $1 a pack hike is a bad idea.

As I've explained in previous posts, tobacco taxes usually bring in less money than forecasted. Some smokers give up the habit.

Back to the Times:

Opponents say, however, that people quitting smoking might mean the state could take in even less money, despite the tax increase.

The state's share of cigarette taxes was last raised in 2002. But the state's take cigarette taxes has declined from $742 million in the 2005 fiscal year to $594.2 million last year.

Other revenue sources, meaning taxes, make up the tobacco tax shortfall.

Even though I'm a non-smoker, this effects me.

But not all smokers will quit.

Some will travel across state lines to buy cigarettes in states such as Indiana. When I lived in Chicago's southern suburbs, I knew a lot of smokers who made the short trip to the Hoosier State to buy cigarettes--smokes were taxed less there. But now Indiana cigarettes cost roughly the same as they do in Illinois--that will change if the Illinois tax is approved.

Who will get hurt the most? Illinois convenience store and gas station owners--cigarette sales account for much of their revenue.

Related posts:

The effect of those high cigarette taxes

SCHIP cigarette tax kicks in, Illinois considering add'l $1 a pack increase

Marathon Pundit attacks higher cigarette taxes

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Matthew Mulligan said...


Colorado raised it's cigaratte tax by one dollar last month. Tax revenues plummeted! Now the lefties that run the state are trying to find something else to tax.

If the objective is to get people to quit smoking, this is a good method. If, as one suspects given the political makeup of Illinois, the objective is to raise revenue, this will be yet another Democrat disaster.

Good luck out there!!

Matt G said...

Oh, come on.
1) Colorado's legislature agreed less than a week ago to temporarily apply its 2.9% sales tax to cigarette sales. The governor hasn't even signed it into law yet, and even if he did the hike wouldn't go into effect until June 30.
Text of the bill is here:
Legislative history here:
Newspaper article summarizing the current state of things:

2) Even if the state had hiked its cigarette tax last month, there's no way they'd know already that "tax revenues plummeted". Bean counters just don't move that fast.

3) Even if they could, and even if they did, ALL tax revenues are plummeting right now-- including the Colorado income tax.

When you just make stuff up, you give the internet a bad name. Why lie like this?

Cigarette tax hikes are absolutely a dumb idea if the point is to raise revenue to pay for services, because fewer people are smoking and those who do are dying. Whether you're a "lefty" or a righty, almost any tax you can think of is going to be a more reliable revenue raiser than is the cig tax at this point. But you can support this argument without just making stuff up.

So, "Matthew Mulligan", why are you making stuff up?