Cigarette tax hike heading to Gov. Quinn's desk

Posted May 29, 2012 @ 03:45 PM
Last update May 29, 2012 @ 03:58 PM
The State Journal-Register

Lighting up is going to cost more Illinois

The Senate on Tuesday approved a $1-per-pack increase in the state cigarette tax, paving the way for Gov. Pat Quinn to sign it into law. Quinn called for the tax hike as part of his plan to close a $2.7 billion hole in the state’s Medicaid budget. The vote was 31-27.

Republicans opposed the tax increase, which brings the state's tax on a pack to $1.98, saying deeper cuts should have been made to Medicaid programs.  Lawmakers already approved a bill that saves the state $1.6 billion in Medicaid costs through program cuts and rate reductions to providers.

“It’s not so much we are trying to protect tobacco use, but rather the continuing pattern we see in the Senate of always looking for more revenue,” said Senate Minority Leader Christine Radogno. “It’s an approach that continues to look for revenue, revenue, revenue rather than tightening the budget.”

Senators whose districts border other states with lower tobacco taxes said people will drive out of Illinois to buy cigarettes.

“People will go across the river to buy cigarettes and most likely will fill up with gas, most likely will buy other items at the convenience store,” said Sen. Kyle McCarter, R-Lebanon. “We are going to lose revenue most likely because of unrelated goods bought across borders when people go there to buy cigarettes.”

In addition to hiking the tax on cigarettes, Senate Bill 2194 also doubles the state taxes on other tobacco products like cigars and pipe tobacco. The tobacco taxes together are expected to bring in $350 million, even if experts are correct that 80,000 adults will quit smoking because of the taxes.

The tobacco tax money will be matched with federal funds to cover $700 million in Medicaid expenses.

The bill also contains a tax on hospitals that will be used to leverage additional federal Medicaid funds and cover $100 million in state expenses.

The final component of the bill spells out in greater detail how non-profit hospitals can maintain their property tax exemption by providing charity care. The issue was clouded after a state Supreme Court decision determined that a hospital was not providing enough charitable care to qualify for the exemption.

http://www.sj-r.com/breaking/x639963628/Cigarette-tax-hike-approved-by-Illinois-Senate-committee