Thank you for smoking: Illinois’ cigarette taxes fourth-highest in the Midwest

The Land of Lincoln's addiction to regressive "sin taxes" burns more and more of Illinoisans' incomes.

According to a recent report published by the nonpartisan Tax Foundation, Illinois’ cigarette tax is one of the most onerous in the region.

Measured in terms of dollars per 20-pack, Illinois’ $1.98 cigarette tax levy is fourth-highest among the other 11 states the U.S. Census Bureau recognizes as Midwestern states.

The lion’s share of Midwestern states ­– Indiana, North Dakota, South Dakota, Iowa, Nebraska, Kansas, Missouri and Ohio – have a cigarette tax at least 19 percent lower than Illinois’ levy. The lowest cigarette tax in the Midwest ­– and nation ­– is Missouri’s, at 17 cents per pack – roughly 91 percent lower than Illinois’.

Minnesota, Michigan and Wisconsin are the only states in the region with higher cigarette taxes than Illinois.

Illinois’ most recent increase on the state cigarette tax occurred in 2012 when lawmakers doubled the levy, raising the tax to $1.98 from 98 cents. Lawmakers had estimated that the tax hike would raise an additional $350 million for the state, but data from the Illinois Department of Revenue, or IDOR, showed the state had fallen short of that goal by about $117 million.

Revenue from the cigarette tax has continued to disappoint. According to IDOR, revenue generated by cigarette taxes has declined annually since fiscal year 2015.

This overestimation dovetails with past findings by the Tax Foundation on the tax’s ability to raise revenue. The report cautions that, despite the opportune public-health messaging cigarette taxes offer lawmakers, “policymakers should be skeptical of using these taxes as long-term solutions to budget shortfalls.” The inefficacy of cigarette taxes can be attributed in part to a general decline in cigarette usage, as well as the ability of smokers in high-tax states to smuggle tobacco from bordering low-tax states.

Unfortunately, cigarette taxes are just one levy that demonstrates the Land of Lincoln’s reliance on “sin taxes.” A recent study published by the Mercatus Center found Illinois to be the seventh-most paternalistic state in the country. Isolating reliance on sin taxes in particular, the study placed Illinois among the worst eight offending states.

Illinoisans are overtaxed, and the state’s dire outmigration crisis is revealing that residents will only allow themselves to be pinched so much. In order for lawmakers to reverse this flight, they’ll first need to kick some counterproductive policy habits. Springfield can start by weaning itself off of its dependence on unreliable sin taxes.