Proposed Cigarette Tax Burdens Everyone

Proposed Cigarette Tax Burdens Everyone
August 20, 2007

James L. Johnston

Jim Johnston is The Heartland Institute's senior fellow for energy and regulatory policy and a... (read full bio)

I write to respond to “Cigarette tax push continues” (Aug. 9). If the state legislature increases average state and local cigarette taxes in Illinois another 75 cents, to $1.83 per pack, it will end up being a tax increase on everybody. More smokers and smugglers will cross state lines to buy in neighboring states that have much lower taxes.

Tobacco companies will not suffer, because they sell on both sides of the state line. Their Illinois retailers, however, will almost certainly see a sharp decline in sales. This will further dampen the state’s already dismal business climate and diminish tax revenues.

The burden will ultimately fall on all taxpayers, who will be on the hook to make up the shortfall.

Jim Johnston (johnston@heartland.org) is an economist retired from Amoco and a policy advisor to The Heartland Institute.

James L. Johnston

Jim Johnston is The Heartland Institute's senior fellow for energy and regulatory policy and a... (read full bio)