SPRINGFIELD | The Illinois Senate approved a $1-per-pack boost in the state cigarette tax Tuesday as part of a plan to shore up the state’s financially ailing Medicaid program.
The measure, which was sent to Gov. Pat Quinn’s desk on a 31-27 vote, would bring the state’s total tax on a pack of smokes to $1.98 beginning June 24. The legislation also includes tax hikes on other tobacco products that will go into effect in July.
Quinn said earlier he will sign the proposal, which will help generate an estimated $800 million to offset increases in the state-funded health care program for low-income Illinoisans.
The legislation includes special provisions regarding hospital taxes that also are part of a larger overhaul of state Medicaid rules.
“This is going to result in a true balanced budget,” said Senate President John Cullerton, D-Chicago.
Convenience store operates say the tax hike will be bad for business, especially for retailers near state borders. Among surrounding states, Wisconsin’s tax is $2.52 per pack. Iowa is $1.36 per pack. Indiana is at 99-cents, while Kentucky is 60 cents. Missouri has the nation’s lowest state tobacco tax at 17-cents per pack.
Retailers said the increase would result in a 20 percent decline in the number of cigarettes sold in Illinois and a $300 million loss in economic activity.
“The tax increase will put people out of business,” said Bill Fleischli of the Illinois Petroleum Marketers Association.
Senators representing border districts said the legislation could hurt some retailers.
“I have to contend with Iowa. I’m just a little concerned,” said state Sen. Mike Jacobs, D-East Moline.
Joining Jacobs in voting “no” were state Sens. Bill Brady, R-Bloomington; Shane Cultra, R-Onarga; Gary Forby, D-Benton; John Jones, R-Mount Vernon; Kyle McCarter, R-Lebanon and state Sen. Dale Righter, R-Mattoon.
State Sen. Dave Luechtefeld, R-Okawville, did not cast a vote.
The last time Illinois raised cigarette taxes was 2002, when the price jumped 40-cents per pack. Fourteen states have taxes that are $2 per pack or higher, with New York’s state tax topping the list at $4.35 per pack.
The legislation is Senate Bill 2194.