Tax Follies–Illinois Edition

by Pejman Yousefzadeh on April 16, 2009

Much like Florida, Illinois is now interested in raising cigarette taxes. Cigarettes are nasty things that I would not try for a million bucks, but if you are counting on a tax on cigarettes to raise money for health care, then you are bound to be disappointed, as the links in my RedState post and the following excerpt point out:

One of Bill McCloskey’s gas stations used to sell 110,000 packs of cigarettes a month before a $2 Cook County sales tax kicked in three years ago. Now it sells 17,000.

Then the cost went up again, thanks to a 62-cent federal tobacco tax increase April 1. That’s dropped McCloskey’s cigarette sales another 12 percent from last April.

Now, with a pack of smokes topping $9 in at least one city, state lawmakers are considering another tax hike of $1 over two years.

The objective apparently is to reduce smoking as well, but that can’t be the sole objective, because cigarette taxes are being used in order to get revenue as well. With tax rates growing onerous, the revenue stream will eventually shut off. Meanwhile, smokers in Illinois will go out of state and get their cigarettes for significantly less in jurisdictions where the tax rates are less burdensome?

Is this smart public policy? I would think not. But when government gets into a taxing mood, it apparently fails to plan more than one step ahead.

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