BELLEVIEW, IL ? Last week an op-ed in the Belleview News Democrat set the stage for what could happen in Illinois should state legislators move forward with a proposed cigarette excise tax increase: rampant smuggling.
The newspaper writes that Illinois Senate President John Cullerton would like to raise the state?s cigarette tax to $1.98 per pack (the current rate in Illinois is 98 cents per pack). Although many non-smokers could probably care less what happens to the tobacco tax, the implications would trickle down into society. In fact, according to research by the Mackinac Center for Public Policy, boosting the cigarette tax could create ?a dangerous atmosphere.?
?Across the country, the opportunity by criminals to profit from trafficking tobacco has led to violence against people and police, including small-scale retail cigarette theft, murder-for-hire schemes, the growth of a counterfeit cigarette market and even the financing of Middle East terrorist organizations.
?Research shows smuggling occurs at higher rates when government increases prices ? usually through a tax ? and when the increased prices are significantly higher than in neighboring states,? wrote the study?s co-author Michael LaFaive.
The Mackinac Center found that in 2009, ?a modest 5.9 percent of all cigarettes consumed in Illinois were smuggled in from other states,? and by contrast, ?Michigan's smuggling rate is more than 26 percent of total consumption ? the 10th-highest smuggling rank in the nation.? The reason: Michigan?s cigarette tax is $2 per pack, which is higher than its bordering states.
?Should Illinois? tax go to $2 a pack, Missouri?s 17-cents per pack tobacco tax would make it worth criminals? time to up their smuggling into the Prairie State,? writes LaFaive.
He concluded: ?Some believe a $1-per-pack cigarette tax hike would generate about $377 million in annual revenue. While a steeper cigarette tax could raise state coffers, smuggling alone could limit the take to about $250 million ? just two-thirds of what is expected.?
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