Cigarette Tax Threatens Business

Published August 20, 2007

The Illinois Legislature’s plan to increase average state and local cigarette taxes to $1.83 per pack, far higher than in neighboring states, will reduce commerce and tax receipts and increase crime. More smokers will drive across state lines to purchase cigarettes at far lower prices, and they’ll buy other things as well, including gasoline, which is likewise cheaper in other states because of lower taxes.

The black market will thrive as smugglers will now profit even more from the time and fuel used in driving to other states for their purchases. Organized crime will benefit as well, as drug dealers already have the transportation infrastructure in place.

Less business and more crime–is that what the legislature really wants?

Jim Johnston([email protected]) is an economist retired from Amoco and a policy advisor to The Heartland Institute.