Cigarette tax increase heads to governor
SPRINGFIELD -- Illinois residents soon are expected to begin paying an extra dollar in taxes every time they buy a pack of cigarettes.
The state Senate voted 31-27 Tuesday to raise tobacco taxes to $1.98 per pack of cigarettes to help pay the state's rising costs for health care for the poor. The plan now heads to Gov. Pat Quinn, who on Tuesday thanked the General Assembly for saving "our Medicaid system from the brink of collapse." He is expected to sign the tax increase.
The tax increase is part of a package meant to fill a $2.7 billion Medicaid funding shortfall. The plan also includes sweeping tax changes for hospitals that aim to lure millions of dollars from the federal government and specify how hospitals should qualify for property and sales tax breaks.
Proponents gave reasons for supporting the tobacco tax increase ranging from fixing the state's Medicaid funding woes to helping prevent children and teens from smoking.
"Smoking hurts a lot of people we know in our family, a lot of people we know in our communities, and it costs a lot of lives in the state," said Sen. Dan Kotowski, a Park Ridge Democrat.
The debate and vote followed partisan lines, with no Senate Republicans voting for the proposal. Sen. Christine Radogno, a Lemont Republican, said the GOP would not support a new tax, especially one that would affect lower income residents.
"This is a very regressive tax," she said.
The total plan is expected to bring in $800 million for the state, with $700 million coming from the cigarette tax increase. Supporters say the state would generate $350 million from the tax, and receive a matching $350 million from the federal government.
It would also increase taxes on most other tobacco products, such as cigars and roll-your-own cigarettes.
Suburban lawmakers and businesses expressed concern an additional tax would hurt revenue and drive costumers away.
"The retail community doesn't want this, and the smokers of this state are already paying enough," said Bill Fleischli, executive vice president of the Illinois Association of Convenience Stores.
While there are concerns the tax increase could push suburban residents across the border to buy cigarettes, Illinois' $1.98 tax would still be lower than Wisconsin's $2.52 per pack tax. Illinois' cigarette tax would be higher than the other bordering states.
Past attempts to increase the cigarette tax have passed the state Senate but have stalled in the House. But the House approved this plan last week with the bare minimum necessary to pass.
The move comes less than a week after lawmakers approved $1.6 billion in cuts to what it pays for health care for the poor. Lawmakers hope to finalize a pension reform plan and approve a budget before the Thursday deadline for adjournment.
Here are taxes per pack of cigarettes in states surrounding Illinois.
Illinois (proposed): $1.98
Source: Tax Foundation