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posted: 5/30/2012 12:01 AM

Past tobacco tax hike lucrative for Illinois

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Ryan Voyles
rvoyles@dailyherald.com

Opponents say a $1-per-pack tax hike will send cigarette buyers across state lines and hurt revenue, but history shows tobacco tax increases actually have brought in a lot of money for the state.

Suburban retailers fear the hike to $1.98 a pack, which Gov. Pat Quinn is expected to sign into law, will drive cigarette buyers away.

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Bill Fleischli, executive vice president of the Illinois Association of Convenience Stores, said retailers report seeing a 30 percent decrease in sales since 2002, the year of the last tobacco tax hike.

But tax revenues spiked for two years after the 2002 tax increase from 58 cents to 98 cents.

Tax revenue from cigarettes rose from $468.8 million in 2002 to $624.9 million the next year. Revenue increased even more in 2004, bringing in an all-time high of $741.8 million.

Tobacco tax revenue has dipped since that high, with receipts staying around $560 million each of the past three years.

Illinois' current tobacco tax rate -- 98 cents on every pack -- is the 32nd highest in the country. Only Missouri and Kentucky have lower rates among the Illinois border states.

With a $1 increase, Illinois would have the 16th highest cigarette tax rate in the nation, second only to Wisconsin's $2.52 tax per pack among border states.

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