Wednesday, April 01, 2009

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

According to CBS 2 Chicago, a pack of cigarettes in Chicago costs as much as $9.36.

That's because the federal SCHIP cigarette tax kicks in today. The funds from the levy will fund health care for children. But as I noted last month, revenue from smoking taxes often falls short of government forecasts--the higher cost will induce some smokers to quit. If that's the case with the SCHIP tax, the program of course will remain, it will be funded by other taxes. That could mean raising other taxes.

So if you don't smoke, this still effects you.

Here in Illinois, a state senator has proposed adding over the course of two years an additional $1 tax on a pack of cigarettes.

If passed, that tax will of course convince some smokers to give up their habit--see above scenario--but more enterprising Illinoisans will drive out of state to buy cigarettes. Not only will that probably lead to revenue shortfalls, but it will hurt small businesses, particularly convenience stores and gas stations.

As we all know, there is a recession going on. Small businesses are the backbone of our economy.

Related post:

Marathon Pundit attacks higher cigarette taxes

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