Five years after Cook County, Illinois, last hiked cigarette taxes, it has emerged that revenues from cigarette taxes have substantially declined, contributing to the county’s budget challenges.
In 2006, the county collected about $200 million in cigarette tax revenue, but that dropped to about $126 million last year.
The County reportedly faces about a $300 million budget gap heading into next year. Locals say the decline in cigarette tax revenue is not the result of smokers quitting using tobacco products. According to Sheriff Tom Dart, “There’s probably some people who have given up smoking, but I don’t think that accounts for $74 million [less].” Rather, it seems to be the result of smokers looking to save money on tobacco however they can — including buying from sellers who offer cigarettes without relevant tax stamps, buying cigarettes in neighboring Indiana, and even rolling their own or switching to non-cigarette types of tobacco.
Cook County Board President Toni Preckwinkle is now looking to raise taxes on tobacco users who take the latter routes in an effort to keep their costs down, as well as purchasers of alcohol:
Like it or not, Cook County Board President Toni Preckwinkle says her cash-strapped county needs higher taxes on alcohol and tobacco to solve a deep deficit.
Preckwinkle also wants to close the loophole on the current cigarette tax to include loose tobacco, rolling papers and snuff.
This is despite Cook County’s prior experience, which indicates that tax increases of this sort will do little and could in fact do harm, from a revenue standpoint. The next budget proposed for Cook County is set to be presented to the County Board next week.