Easy vote on cigarette tax
Let's raise taxes on those other guys.
Owing to their bad habit, cigarette smokers often are coughing.
This week, smokers in Illinois are choking on a decision by state legislators and Gov. Pat Quinn to hike the state's tax on a package of cigarettes from 98 cents to $1.98, a levy substantially above the national average of $1.46 a pack.
The increase gives Illinois the third-highest tax rate on cigarettes among its border states. Wisconsin leads with a tax of $2.52 per package. Then comes Michigan ($2), Illinois ($1.98), Iowa ($1.36), Indiana (99 cents), Kentucky (60 cents) and Missouri (17 cents).
The new law will take effect as soon as it is signed by Gov. Quinn, who pushed for the increase as a means of generating more revenue to support the state's Medicaid program. Quinn hopes to generate an estimated $700 million for Medicaid — $350 million in new cigarette tax revenue and another $350 million in federal matching funds.
The ease with which Quinn proposed and the Legislature passed this tax hike demonstrates once again what an easy political target smokers have become. When smokers made up 50 percent of the adult population, their numbers made them harder to push around.
Now smokers make up roughly 20 percent of the adult population, and they can be regulated and taxed pretty much at will. Such is the nature of the tremendous change in social attitudes about cigarettes and the health dangers they pose since the U.S. surgeon general announced in 1964 that smoking poses a serious health risk.
What is striking about the new tax is the insincerity that surrounded legislators' actions. They made it sound as if they were doing smokers a favor by making this vile habit more expensive. They acted as if they really hope the greater expense will persuade people to quit.
This really isn't about the money, they argued. But everyone knows when people say it isn't about the money, it's all about the money.
Illinois has become as hooked on the revenue from cigarette sales as smokers are on their cancer sticks. The last thing Illinois' political elite wants is for people to quit smoking because the tax revenues generated by smokers would collapse if they did.
But revenue from cigarette taxes is a source of diminishing returns. Sure, there will be much more revenue because most Illinois smokers will have no real choice but to pony up for their smokes. But there will be fewer sales. Illinois shares huge borders with Indiana, Kentucky and Missouri, and the higher cost in Illinois will make it more cost effective to go elsewhere.
A carton of cigarettes will be $10 cheaper in Indiana, $14 cheaper in Kentucky and $18 cheaper in Missouri.
Locally, that means even more trouble for Danville-area merchants who must compete with Indiana merchants who can sell cigarettes and gasoline at a lower rate.
This is just for legitimate commerce. Cigarette smuggling in Illinois will become even more prevalent now that our legislators have generously boosted the profit margin for those who operate outside the law.