Federal cigarette tax increases April 1
And there may be more to come if Gov. Quinn gets his way
March 24, 2009
BY CAROLE SHARWARKO staff writer
Buy a pack of Marlboros, and send a kid to the doctor. That's the aim of a new federal tobacco tax increase set to jack up the price 61 cents per pack starting April 1, raising the total federal tax to $1 per pack. Cigars, chewing tobacco and snuff will go up, too.
Revenue from the increase will fund the continuation of the State Children's Health Insurance Program.
Manager Syed Hasan bags cartons of cigarettes at the Tobacco House in Frankfort. A federal tax increase April 1 will increase the price of a pack of cigarettes by 61 cents. And Gov. Pat Quinn wants to add another $1 per pack state tax.
(Joseph P. Meier — SouthtonwStar)
As smokers inhaled that news, many manufacturers raised their prices, trying to compensate for the expected losses from quitters. Then on March 25, Gov. Pat Quinn proposed a $1 per pack increase in the state tax.
"It's ridiculous," said Katie Malachinski, a smoker from Frankfort. "Every year they put more tax on cigarettes because they don't know how to spend the money they have."
Quinn wants to use the tax to take a chunk out of the state's budget deficit. If passed, it also would head off an eventual tax loss caused by the federal increase, according to Stacey Peters, spokeswoman for American Cancer Society's office in Tinley Park.
"We think making cigarettes more expensive encourages people to quit smoking, especially youth," Peters said. "The increase in the federal tax will encourage people not to smoke, so we won't get the same amount of revenue."
Studies have shown that cigarette tax increases do prompt smokers to quit, according to the Campaign for Tobacco Free Kids. In general, the anti-smoking group says, for every 10 percent increase in the cost of cigarettes, smoking rates decline 3 percent to 5 percent.
Since so many smokers quit when the price goes up, the state can't collect as much money in its own tax.
On the flip side, the state stands to save money because it spends $4.1 billion every year on health care costs directly caused by tobacco use, according to cancer society data.
Illinois also will benefit from an extra $32.8 billion for its SCHIP during the next four and a half years.
All this money should subsidize health care for uninsured and underinsured children. At least, that's the plan.
'You can't punish smokers'
"If the money goes to a good place, it's fine. I'll pay the tax," said Samir Yasin, of Mokena. "But it goes into the rich people's pockets. The middle class has to pay for everything."
Yasin was at Tobacco House in Frankfort, trying to haggle for a lower price on a carton of Marlboro Mediums. Store manager Alia Hasan didn't budge on the price but said he feels sorry for smokers.
He showed three receipts that sat on the counter, folded under an open pack of Marlboro Ultra Lights. A woman tried two credit cards to pay $4.85 for the pack, but she was declined.
"She was so desperate, she opened the pack already," Hasan said. "I feel sorry for people. The economy is bad, and cigarettes are expensive."
Customers gripe about the price bumps when they visit the store, he said, and some mention quitting. Hasan said many of them share his attitude that smokers are singled out.
"(SCHIP) is important, but we should all care about that," he said. "My question is, why smokers? They are an easy target. What about casinos, or booze, or what about taxing entertainment? They can legalize marijuana and tax that.
"You can't punish smokers for smoking. Are you going to punish overweight people for eating a lot of fries?"
'Look at every option'
David Beck, of Orland Park, drove south to the Frankfort store to avoid Cook County taxes. He said he's tired of paying everyone else's bills.
"The state's too high, the federal is too high," Beck said. "If they want to balance the budget, then do some cuts. Cut some state jobs."
Smokers aren't the only ones who worry about where all the new tax revenue will end up. Dr. Shastri Swaminathan, president of the Illinois State Medical Society, said the society supports both tax increases, especially if the state can chop at its deficit. But he said the government should widen its view to consider every possible source of funding for children's health care.
"In the past, we've had laws that have good intentions, but the money ends up elsewhere," Swaminathan said. "Funding SCHIP is so important, we should look at every option."
Carole Sharwarko can be reached at csharwarko@southtownstar.com or (708) 633-6872.
Expected effects of the federal tax increase
The 61-cent federal cigarette tax increase would prevent more than 900,000 premature deaths attributed to smoking.
Health care savings from reduced tobacco-related illnesses would add up to the following:
• $420 million from pregnancy complications
• $350 million from heart attacks and strokes
• $200 million from lung cancer
Source: American Cancer Society
Expected effects of the proposed state tax increase
• $278 million in new state revenues will be garnered in the first year (with state revenue decrease from federal tax factored in).
• The tax increase will lead to a 12.5 percent decrease in youth smoking.
• About 112,700 kids in Illinois will be kept from becoming addicted adult smokers.
• About 54,700 adult smokers in Illinois would quit.
• Illinois would save $2.4 billion in health care costs from adult and youth smoking declines.
• If Illinois does not raise its cigarette tax, it will lose $56 million in revenue (caused by the new federal cigarette tax increase and ongoing smoking declines).
Source: American Cancer Society
