Cigarette Crunch in Anticipation of New Tax

Smokers are buying in and the state's now allowing retailers to keep up with demand, commerce group says

By Alexandria Fisher and Christian Farr
|  Tuesday, Jun 12, 2012  |  Updated 8:51 PM CDT
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Taxes on Illinois cigarettes will go up next month. That's got some nearby Indiana stores expecting increased sales. Christian Farr reports.

Taxes on Illinois cigarettes will go up next month. That's got some nearby Indiana stores expecting increased sales. Christian Farr reports.

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Cigarette inventory is low across the state of Illinois, and one organization says it comes from a combination of customers hoarding and the state holding back on cigarette stamps.

Customers are stocking up on smokes, buying extra packs and cartons before the price goes up.

"It's a guy that usually buys one carton," William Fleischli, Vice President of the Illinois Association of Convenience stores told the State Journal-Register. "Now he wants to buy two or three, trying to save $18 or $20."

Fleischli said the state of Illinois is holding back on the sale of tax stamps, which are required to sell cigarettes at retail.

"They're restricting the sale of a product in anticipation of a product going up in price," he said. "They're going to gain because the price goes up."

The Department of Revenue spokesman Greg Rivara disputed that claim and said stamp availability was increased by 25 percent. The department is not allowing stores to purchase more than their average number of stamps for this time of year, but the 25 percent increase was intended for the seasonal rise in smoking and the influx of those trying to detour the tax hike, the State Journal-Register reported.

Another recent tax increase is already having an effect on tobacco sellers in Illinois

"After March 1 when Cook County raised their taxes, I lost about--between 15 to 20 percent of my business," Illinois tobacco shop owner Jawad Muqeet said. "The prices are so high nobody wants to buy cigarettes in downtown"

Indiana tobacco sellers could gain from the this increase. Hammond smoke shop owner Roni Patel says a carton of Marlboro cigarettes costs $56 on average in Indiana, compared to $50 in Will County, Illinois. He says the average price per carton in Will County will raise to $61 following the tax increase, expected to go into effect June 24.

Patel is hopeful about his prospects under the new law.

"Hopefully, yeah. We will make a fortune, you know," he said.


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