Illinois County's Cigarette Tax Hike Unlikely to Deliver

Illinois County's Cigarette Tax Hike Unlikely to Deliver

On Friday, the Cook County, Illinois, County Board voted to increase taxes on cigarettes by $1 per pack, bringing the full amount of taxes paid on a pack of cigarettes legally purchased in Chicago to $6.67.

That is just 19 cents less than taxes owed on a pack of cigarettes legally purchased in New York City, where low-income smokers spend about 25 percent of their annual household income on cigarettes.

The move is supposed to bring in an extra $25.6 million in revenue next year, but critics say Cook County faces significant challenges in meeting that target.

First, as noted by County Commissioner Bridget Gainer, D-Chicago “the revenue increases are… avoidable, if you so choose, to residents of the county.” 

Not only could the county see less revenue if smokers quit, but Chicago smokers are already well-known for their willingness to consume cheap cigarettes purchased from lower tax jurisdictions. 

According to a University of Illinois at Chicago study, as many as 75 percent of cigarettes smoked in Chicago were purchased in lower tax jurisdictions, including Indiana. 

Some Illinois residents also purchase smokes in neighboring Missouri, which last week rejected a ballot initiative that would have raised its cigarette tax from the nation’s lowest at 17 cents per pack. 

That low tax rate, combined with the Cook County increase and the earlier, statewide hike in Illinois’ cigarette tax rate by $1 per pack, could fuel additional smuggling of cigarettes from the Show Me state into Cook County, critics charge. 

If smokers in Cook County quit, or move to buy more illicit, untaxed cigarettes, that will likely blow a hole in the county’s revenue projections tied to the increase while also reducing the amount of revenue Illinois and Chicago derive from their own cigarette taxes – a tricky situation for all three jurisdictions to manage.

Chicago Mayor Rahm Emanuel earlier this year rejected the idea of a city-wide cigarette tax increase.

Read More Stories About:

Big Government, Chicago, Smuggling

Breitbart Video Picks