Illinois lawmakers approve tax hike on tobacco products
Revenue from tax increase hopes to help Medicaid fund.
Wednesday, June 20, 2012 - 13:04
BURNING UP YOUR CASH: Illinois hopes the increase in taxes will push residents to quit the habit. (Photo: Abdullah Najeeb Photography/Flickr)
Lawmakers in Illinois recently approved a hefty increase in taxes for tobacco products. The buck-a-pack tax promises to revive the state Medicaid fund, which has already suffered under drastic budget cuts and hopes to help smokers kick the habit rather than fork out the extra cash for their cigarettes. In Chicago, the total tax of a single pack of cigarettes will hit $5.67 once the $1.98 tax takes effect on June 24, 2012.
That's a lot of cash for 20 coffin nails. Governor Quinn believes that the bill will convince some residents to walk away from their addiction, and keep children from picking it up in the first place. But will it? How much are smokers willing to pay to get their nicotine fix?
According to the Campaign for Tobacco-free Kids, the only place in the United States that out prices Chicago is New York, where residents pay a staggering $15 per pack, after their $5.85 state and local taxes are added. While the rest of our great state does not have the local tax that plagues Chicago, the dollar hike will still affect the pocketbooks of our tobacco consumers. A quick look at our borders shows where that business will be going.
Not only will cigarettes be cheaper, but for the most part gas is, too, in all border states except Wisconsin. While Iowa and Indiana will have a lower tax once the bill is in effect, the real show stopper is Missouri, which boasts the lowest tax rate in the nation, at a mere 17 cents per pack. A weekend trip to load up on gas and cigarettes will likely result in even greater losses of revenue to Illinois, as consumers take more of their shopping out of the state in order to save money.
But if the tax has the desired effect of getting residents to quit, the savings to our state could be staggering. Studies show that for every 10 percent increase in tobacco prices, youth smoking decreases by almost 7 percent. In Illinois, that equates to approximately 77,000 children that won't cough up the cash to start smoking. That, combined with the adults who break their addiction, could ultimately save the state 2.4 billion dollars in health care costs.
Currently Illinois is experiencing a shortage of cigarettes, as smokers stock up on cartons before the new pricing takes effect and businesses are having difficulty restocking while waiting for the new tax stamp.
You might also like: