Boosting the state cigarette tax will hurt lower-income consumers and send people to neighboring states to buy tobacco, industry representatives say.
Gov. Pat Quinn apparently is supporting a plan to the state’s cigarette tax — now 98 cents a pack or $9.80 a carton — by $1 per pack over this year and next.
“You buy gas where it’s cheapest, and it’s the same way with cigarettes,” said Harry “Bud” Kelley, executive director of the Illinois Association of Tobacco & Candy Distributors. “If this tax passes, they’ll have to have a construction program to build another bridge across the river into Missouri from Quincy.”
Kelley said the state tax increase, combined with an upcoming federal cigarette tax hike, would result in $100-a-carton cigarettes in the city of Chicago, which has a $20-a-carton Cook County tax and a $6.80 city tax on top of state and federal taxes.
Federal taxes are going up $6.10 per carton in every state effective April 1, bringing the federal per-carton cigarette tax to $10.
“At least 20 percent of the cigarettes in Illinois right now are bootlegged from another state, and that will only go up if this passes,” Kelley said.
Bill Hoban, general manager of 15 Discount Tobacco stores in central Illinois, said tobacco retailers are still trying to gauge the effect of President Obama’s State Children’s Health Insurance tax on all tobacco products, the April 1 increase.
“It’s putting it all on the backs of the tobacco people,” Hoban said. “It’s going to hurt the pocketbook of low-income people.” He estimates that 20 percent to 25 percent of the population uses tobacco, and half of those are in lower-income brackets.
“It is the worst thing the state of Illinois could do, and the state will lose in the long run,” Hoban said of a state tax increase as well.
“Missouri is going to sit over there and smile ear to ear. All we’re doing is funding Missouri and giving Illinois residents more reason to drive.”
The Illinois Licensed Beverage Association also opposes an increase in the tobacco tax, said its executive director, Daniel Clausner.
“Tobacco tax increases affect other goods and services,” he said. “If people pay more in the aggregate to smoke, they’ll consume fewer adult beverages and outside meals.”
Kelley says the state also will lose sales tax revenue as smokers go to neighboring states to buy cigarettes and while there buy gas, groceries and other items.
“They’re saying the state will make $340 million if the tax goes up $10 a carton,” Kelley said. “That won’t happen.”
He said Indiana’s state tax on a carton of cigarettes is $9.95, Missouri’s $1.70 and Kentucky’s $6, recently increased from $3.
“I’m not saying we shouldn’t be taxed,” Kelley said. “But we’re already paying our fair share.”
Chris Dettro can be reached at 788-1510.