Holy Smokes! Another Tax Hike?!

One of Bill McCloskey's gas stations used to sell 110,000 packs of cigarettes a month before a $2 Cook County sales tax kicked in three years ago. Now it sells 17,000.

Then the cost went up again, thanks to a 62-cent federal tobacco tax increase April 1. That's dropped McCloskey's cigarette sales another 12 percent from last April.

Now, with a pack of smokes topping $9 in at least one city, state lawmakers are considering another tax hike of $1 over two years.

Advocates say it could raise nearly $1 billion for health care and reduce the number of smokers, thus decreasing the state's health services burden. But others say cigarette prices already are too high and people wanting a puff will travel across state lines to get it.

"When you lose that sale on the cigarettes, you lose that sale on the gas, you lose that sale on the merchandise," said McCloskey, general manager for nine Minuteman Convenience Centers in the Chicago area.

Gov. Pat Quinn first pitched a cigarette tax increase last month, saying it would help fill an $11.6 billion deficit in the state budget. He said it could raise $365 million by the second year.

Sen. Jeffrey Schoenberg tweaked that plan by suggesting diverting the new revenue to hospitals and nursing homes, which he said would increase federal matching funds from the Obama administration's economic stimulus program, raising nearly $1 billion for Illinois.

The Evanston Democrat won Senate approval of the bill 30-26, without any Republican votes.

He said Quinn and Michael Madigan, speaker of the House where a similar Schoenberg plan died last year, are on board. Spokesmen for Madigan and Quinn, both Democrats, did not respond to requests for comment. The House is back in session April 21.

According to the legislation, the 98-cent state tax per pack of cigarettes would increase by 50 cents in September and another 50 cents a year later.

But the state isn't the only one seeking a piece of the action.

The same day Schoenberg proposed his plan to a legislative committee, the federal cigarette tax climbed from 39 cents to $1.01 a pack.

The combination of local, state and federal taxes gives Schoenberg's Evanston home the third-highest cigarette tax in the nation, according to the Campaign for Tobacco-Free Kids. Smokers there cough up $3.48 in taxes per pack -- 50 cents for the city, $2 for Cook County and 98 cents for the state.

In Chicago, a pack of cigarettes at a downtown 7-Eleven costs $9.35 a pack. In suburban Cook County, a pack of Marlboros flirts with $7 while in nearby DuPage, it's $4.60, according to McCloskey.

Northern Illinois tops the charts for highest cigarette taxes in the country, according to Tobacco-Free Kids. Chicago, Evanston, Cicero and Rosemont are among the nation's ten most expensive places to buy cigarettes, a list that also includes New York City and parts of Alaska.

That's fine by health advocates. Smoking is the leading cause of preventable death in the U.S., responsible for 443,000 premature deaths annually, according to a recent report by the U.S. Centers for Disease Control and Prevention.

The more expensive they are, the less likely teens will buy them and pick up a nasty habit, while more current smokers will try to snuff it out, said Mark Peysakhovich, senior director of advocacy for the American Heart Association.

"We hope this will be one more straw on the camel's back to get people to quit," Peysakhovich said.

Despite that laudable goal, Rep. Frank Mautino said taxes should be increased to raise revenue, not dictate personal habits.

"Do we want to then also make a Big Mac $6 or do we want to put an extra dollar a six pack on sodas because we think people should use less of it?" asked Mautino, a Spring Valley Democrat.

And every time there's talk of tax or fee increases, lawmakers fear the loss of business to neighboring states.

Even if businesses stay in Illinois, fewer cigarettes will sell, said Bill Fleischli, executive vice president of Illinois Association of Petroleum Marketers and Illinois Association of Convenience Stores.

The Quinn administration has built in an expected 16 percent drop in tobacco purchases because of higher prices. Fleischli argues sales will drop 20 percent, forcing small businesses to close.

"In these economic times, we can't do that," he said.

Copyright AP - Associated Press
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