Cigarette taxes are touted as fiscal panaceas, but studies show that they often don't collect as much money as promised. That is because the higher levies push some smokers to give up the habit.
Last year Governor Pat Quinn proposed raising the state cigarette tax by $1 a pack. It was tabled, but now it's back.
If it becomes law, of course some smokers will keep puffing. What about the extra cash for the state? Well, a University of Illinois-Chicago economics professor, David Merriman, did some contemporary archaeology by sending students on a dumpster-diving mission in the city. They discovered that many smokers are voting with their feet and purchasing cigarettes in lower tax jurisdictions in the suburbs and Northwest Indiana.
The numbers: Merriman's crew found that 75 percent of the disposed cigarette packs did not bear a City of Chicago tax stamp. The revenue loss to Chicago? Merriman estimates it to be $10 million a month. Yep, a month.
If Quinn gets his way, look for an economic boon--for Indiana.
After years of fantasy budgets foisted on the state by Quinn's former running mate, Rod Blagojevich, Illinois has a $13 billion deficit. The smoking tax could continue kicking the can down the road. /gain.
Crazy Politico and his wife kicked the butts last month. Here is his take on cigarette taxes:
As for the down side to quitting, I don't see Andrew, the clerk at 7-11 nearly as much as I used to, but I still stop by once in a while to get the wife a candy bar (her new vice) or a jug of milk. The other down side is my income taxes will probably go up. I figure as much as I was paying a year in cigarette taxes to Illinois the state will have to raise income taxes to make up for what I'm not giving them.Technorati tags:
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