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Convenience store group warns increasing cigarette taxes could cost jobs

Illinois Watchdog.Org

Thursday, March 14, 2019  |  Article  |  By Greg Bishop

Taxes, sales (88) , Tobacco, Smoking Ban, E-Cigarettes
An association that represents convenience stores throughout the state says the governor should find budget efficiencies instead of increasing taxes on products they sell.

Gov. J.B. Pritzker wants to increase the tax on a pack of cigarettes by 32 cents. That’s expected to raise $55 million in revenue, the administration said.

Illinois Association of Convenience Stores Executive Vice President Bill Fleischli represents thousands of convenience stores around the state. He said Pritzker's proposal will make Illinois' taxes on cigarettes about $2.30 a pack in Illinois. He said that would push Illinois' taxes on cigarettes to the highest in the region, behind Wisconsin.

"I'm not sure with our sales tax in combined that'd we be higher than Wisconsin," Fleischli said.

Fleischli said the tax will affect the poorest Illinoisans who smoke the hardest. He also said it would encourage consumers that live close to Illinois’ borders to shop in other states for tobacco and other goods like gas, milk, bread and more.

Fleischli said the governor's plan won't work.

“Every time we’ve raised it, it doesn't meet the projections that they wanted to raise,” Fleischli said. “So when that does backfire, the state won’t get enough money, but retail won’t get enough money and facilities will be in trouble.”

It’s not just tobacco taxes Pritzker hopes to increase. He also wants to increase taxes on vaping products to raise an additional $10 million.

Matt Fortin owns Upper Limits, a vape shop down the street from the state capitol. He hopes the proposed tax increase on vaping products is done fairly. But he said increasing taxes on products he sells will make his shop less competitive to online retailers.

“Online shoppers, they want value,” Fortin said. “It’s value shopping and people want deals and pricing matters and that really will price us out of a lot of sales.”

Fleischli said the increased tax proposed for tobacco and e-cigarettes or vapor products could have unintended consequences.

“Anything that you tax and get it … a competitive disadvantage will cost you customers and eventually cost you money and that’s usually jobs,” he said.

Instead of increasing taxes, Fleischli said the state should find other ways to shore up the budget.

“Look at anything, look at a reduction in spending,” Fleischli said. “Look at other areas, not just the sins. We ought to go someplace else.”

Pritzker has dismissed looking at service taxes in Illinois. While he was promoting his progressive income tax proposal in Chicago on Tuesday, the governor said taxes on services are flat taxes and put the bulk of the burden on the poor and middle class.