A pack of cigarette with the tax stamp for both City and County, displayed as Cook County Board President Toni Preckwinkle and Mayor Rahm Emanuel join in City-County Collaboration summit, Tuesday February 7, 2012. | John H. White~Chicago Sun-Times.
Updated: May 24, 2012 8:06AM
The very first cigarette tax in the nation was imposed in 1921 in Iowa. It was 2 cents a pack.
Cigarette taxes have gone up a bunch since then. Massachusetts now has the highest rate — $2.51 a pack — and supporters of a health-care bill there hope to boost it an additional $1.25 this spring.
Illinois’ tax is 98 cents a pack, 32nd highest among the states. Gov. Pat Quinn wants to raise that by $1 a pack to generate about $3 38 million a year for Medicaid. The new revenue would be matched dollar for dollar by the federal government.
Nobody likes tax increases. But this is one that makes sense, and the Legislature should approve it.
Arguments against cigarette taxes fill the air like cigarette smoke in an elevator. Critics say it’s a nanny tax, an example of government using its power to tax to steer citizens in a desired direction.
They say it hurts small retailers. When an Illinois smoker drives to Missouri to buy smokes, where the tax is 17 cents a pack, Illinois businesses lose not only that cigarette sale, but also the sale on gasoline, liquor, groceries and whatever else the smoker buys.
The number can be significant. When Cook County doubled its cigarette tax to $2 in 2006, cigarette sales at one Riverside gasoline station plummeted from 110,000 packs a month to just 17,000.
The Illinois Retail Merchants Association says the state already is battling a problem of unregulated counterfeit cigarettes on which no taxes are paid. And the association predicts that after an initial revenue bump, the tax increase would generate less and less net revenue.
Republican legislative leaders oppose any tax increases. “A cigarette tax, even if that’s one that’s not offensive to many people, is a revenue solution to a spending problem,” Senate GOP Leader Christine Radogno said Friday. “And that’s a philosophical difference between our parties.”
The critics overlook more important facts.
First, a tax on cigarettes will deter smoking. The American Cancer Society estimates the tax increase would stop 72,700 children in Illinois from becoming smokers and encourage 53,400 adults to quit. That’s no small accomplishment, given how terrible smoking is for our health.
Second, smoking-related health-care costs drive up Medicaid spending, a fact Gov. Quinn emphasized when he met with the Sun-Times editorial board Friday. Smoking is estimated to cost the state $4.10 billion a year in health-care costs — and $1.5 billion of that tab is picked up by Medicaid.
“This is a very big public health measure,” Quinn said, “and anyone who is involved in public health is all for this.”
Third, trying to balance the state’s Medicaid budget with cuts alone means walking away from federal dollars. No other tax offers that huge federal match.
Fourth, Quinn already is proposing 58 stunningly deep Medicaid cuts. Further cuts would be devastating.
Fifth, the last three Republican governors of Illinois backed cigarette tax increases five times.
Radogno and the House Republican leader, Tom Cross, have voted for a cigarette tax increase, too.
It’s time they do so again, and bring their party with them.
Are we, or are we not, a just and compassionate society?