Dollar-a-pack cigarette tax hike goes to governor
SPRINGFIELD -- Senators approved and sent to Gov. Pat Quinn a bill that will more than double Illinois' 98-cents-a-pack cigarette tax, and also doubles the levy on other tobacco products such as cigars and pipe tobacco.
The legislation (SB 2194) increasing the cigarette tax to $1.98 per pack was approved 31-27, despite "no" votes from all four senators representing areas of East Central Illinois.
No Senate Republicans voted for the bill, although last week 18 GOP members of the Illinois House supported it.
The tobacco tax increase will raise a projected $350 million in state tax funds, plus another $350 million in federal matching funds to help cover Medicaid expenses. Supporters say it will help close a $2.7 billion hole in Illinois' Medicaid budget. Most of the rest of the money will come from slashing the number of people receiving Medicaid benefits.
Quinn, who said he would sign the bill, hailed its approval, saying it would "decrease smoking-related costs to Medicaid," which he claimed amounted to $1.5 billion last year.
"This legislation will help 60,000 people quit smoking, prevent 60,000 deaths from smoking-related conditions, and keep 80,000 kids from taking up smoking in the first place," said the governor.
"By working together to pass these bills, strong progress has been made in our mission to restructure Medicaid, so that it serves as a health and wellness system instead of a provider-payment system. As a result our Medicaid system will continue to serve millions of Illinois residents who rely on it."
But Sen. Dale Righter, R-Mattoon, said the tax increase would hurt Illinois' economy, especially in border areas like his. With the increases, only Michigan and Wisconsin, among Midwestern states, will have a higher cigarette tax than Illinois. Missouri's, the lowest in the nation, is 17 cents a pack. The national average is $1.46 per pack.
"Five of the 12 counties I represent now sit on the Illinois-Indiana border," Righter said. "This makes it more likely that people will go over, and when they go over to buy their carton of cigarettes, they'll go over and shop, and fill up their car with gas and go out to eat. And so the business owners in my district lose that commerce.
"But from a broader fiscal perspective this is another tax increase that brings new money into Springfield that the state's leaders will spend. Every dollar you bring in to fuel new spending is a dollar you don't have to cut, and that's going in the wrong direction."
Righter said he preferred making $700 million more in cuts, either in Medicaid or in some other state program.
Frerichs, one of the few Democrats to vote against the tax increase, said it "would put Danville at a disadvantage" because of lower tobacco prices across the Indiana border. Danville is in Frerichs' Senate district.
"Number two, most smokers tend to be working-class people, and I think this is a tax on our poorer citizens," he said.
Asked the difference between voting against the cigarette tax Tuesday but for an income tax increase in January 2011, Frerichs said "the income tax was applied fairly to the people of Illinois. This is a tax on a small percentage of the people of Illinois."