Dear Legislator:
On behalf of the National Taxpayers Union's nearly 14,000 members in Illinois, I urge you to oppose any cigarette tax increase proposed in either chamber of the General Assembly. Such a tax hike is not what Illinoisans need in the midst of a painful recession. Raising the tax by $1 in this economic climate would hammer individuals and businesses alike, especially the poor and small businesses. Your vote against this misguided proposal would send a clear message to taxpayers that the best way to solve Illinois' budget woes is to trim spending and reform, rather than raise taxes.
While some see cigarettes as easy targets for taxation, the reality is that tobacco tax hikes are very burdensome to small businesses and the poor. Currently, Illinois has a cigarette tax rate that is below the national average. But if enacted, this tax increase would suddenly put Illinois convenience stores at a competitive disadvantage, as their cigarettes will cost more than those sold in all neighboring states except Wisconsin. The National Association of Convenience Stores reports that tobacco products account for 33 percent of total sales. Especially when Illinois' unemployment rate stands at nearly 12 percent, a job-killing tax increase on small businesses makes no economic sense.
This recessionary tax increase will impact far more than the small business community. Since the poor are more likely to smoke, Illinois' low-income families, especially those who live in Chicago's South Side and the rural Downstate region, will disproportionately feel the pinch of this tax. With a federal cigarette tax increase already having taken effect, boosting the state rate would amount to a one-two punch aimed at Illinois' worst-off citizens. Furthermore, as the combined federal-state cigarette levy climbs and consumption decreases, Illinois will be faced with a dwindling pot of revenues. This is what happened following enactments of cigarette tax hikes in New Jersey and the District of Columbia, which reported collection shortfalls of $52 million and $7 million, respectively. That's all the more reason why policymakers should instead focus on spending restraint and tax reform to restore the state's fiscal condition to health over the long term.
Now is the worst possible time to raise taxes, including those on tobacco products. Taxpaying families and businesses from Chicago to Marion are counting on you to do what's right for Illinois by opposing a tax increase on cigarettes.
Sincerely,
John Stephenson
State Government Affairs Manager