CHICAGO -- Governor Pat Quinn on Thursday signed a $1-per-pack cigarette tax increase into law as part of a package of reforms that he said is intended to rescue the state's Medicaid system from the brink of collapse and make the program sustainable for the future.
The cigarette tax currently stands at 98 cents per pack.
The series of new laws reaches the governor's goal of $2.7 billion in Medicaid savings, and also includes $1.6 billion in Medicaid spending reductions. The legislation targets fraud and abuse in Medicaid, reduces rates for providers and decreases the burden of smoking on the Medicaid system through the tax increase, he said, which will also prevent children from smoking. The new laws also provide new federal funding for hospitals, and end the long-time practice of balancing the budget by pushing Medicaid bills into the next fiscal year.
Healthcare advocates hailed the cigarette tax increase as an important public health measure.
Before the bill reached the governor's desk, Republicans had condemned the tax increase, sponsored by State Senator Jeff Schoenberg (D), because of worries it will drive Illinois smokers across the border to buy lower-tax cigarettes on most sides of the state, said a Post-Tribune report.
Bill Fleischli, executive vice president of the Illinois Association of the Convenience Stores told CBS Chicago that he fears customers will travel to Wisconsin, Indiana and even Missouri to stock up on cheaper cigarettes.
The price difference would be most pronounced along the Missouri border, where cigarettes would be $1.81 less per pack than Illinois. Indiana cigarettes would be taxed at a rate that is 98.5 cents per pack lower than Illinois.
But even with an Illinois tax increase, Wisconsin taxes cigarettes at a higher rate: $2.52 per pack in state taxes alone.
The new tax increase makes the total taxes on a pack of cigarettes sold in Chicago $5.67 and $4.99 in suburban Cook County.
"The tax does serve the purpose of pricing some people out of the market, indeed," Schoenberg told The Chicago Tribune.
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