Chicago Pre-Empted from Adopting Tobacco Tax

Illinois state law prohibits the city of Chicago from enacting Emanuel’s proposed taxes

Thomas A. Briant, NATO Executive Director

Rahm Emanuel

Rahm Emanuel

CHICAGO -- Chicago Mayor Rahm Emanuel has proposed a sweeping anti-tobacco ordinance that would increase the legal age to purchase tobacco to 21; set minimum prices for certain tobacco products; mandate minimum package sizes for various products; prohibit the redemption of tobacco product coupons; outlaw multipack discount pricing; require minimum package sizes of 20 cigarettes, 20 little cigars and four large cigars unless a cigar has a retail price of more than $3; and enact new taxes on other tobacco products.

The proposed ordinance would tax other tobacco products at the following tax rates:

  • Roll-your-own tobacco at a rate of $6.60 per ounce.
  • Smokeless tobacco at a rate of $1.80 per ounce.
  • Little cigars at a rate of 15 cents per cigar.
  • Large cigars at a rate of 90 cents per cigar.

While Emanuel is proposing the implementation of these new taxes, Illinois state law prohibits the city of Chicago from enacting any such taxes. 

Generally, under Illinois state law, a home rule municipality is prohibited from imposing an excise tax on tobacco products unless the municipality had previously adopted such a tax before July 1, 1993.  This prohibition on the adoption of tobacco excise taxes is found in 65 Illinois Compiled Statutes Section 5/8-11-6(a).  Besides this literal prohibition in state law preventing a home rule municipality such as Chicago from adopting a tax on tobacco products, Section 5/8-11-6(a) also states that the pre-emption is a constitutional limit on the authority of home rule cities to enact certain taxes. 

That is, the state pre-emption of a home rule municipality to assess a tobacco tax originated with the Illinois state constitution.  Moreover, a review of the Chicago city code reveals that the city did not impose a tax on other tobacco products before July 1, 1993.  This absence of a tobacco products excise tax precludes the city of Chicago from now adopting such an excise tax on cigarette roll-your-own tobacco, smokeless tobacco, little cigars and large cigars.  In fact, since 1990 when Section 5/8-11-6(a) of the Illinois Compiled Statutes was enacted, this law has never been construed to permit Chicago or any other home rule municipality in Illinois to tax other tobacco products.

Moreover, on Jan. 13, 2011, Resolution R2011-19 was introduced before the Chicago City Council urging the Illinois legislature to amend Section 5/8-11-6(a) to “permit home rule units of government in the State of Illinois to have the authority to tax any and all tobacco products.”  The resolution acknowledged that while Chicago presently has the authority to tax cigarettes, a change in state law is required to authorize home rule municipalities to tax other tobacco products.  The resolution subsequently failed to pass the Chicago City Council on May 18, 2011. 

Also during the 2011 and 2014 Illinois state legislative sessions, bills were introduced to amend Illinois Compiled Statutes Section 5/8-11-6(a) to allow home rule municipalities to enact excise taxes on other tobacco products, regardless of whether such a tax had been imposed before July 1, 1993.  However, these bills were not passed by the Illinois legislature.  These two legislative attempts to clarify existing state law is a further acknowledgement that Chicago cannot enact a tax on tobacco products unless and until the Illinois state legislature changes the pre-emption under state law.

NATO, the Cigar Association of America and the International Premium Cigar and Pipe Retailers Association have submitted a joint letter to the chairman of the Chicago City Council’s Finance Committee explaining why the tax on other tobacco products cannot be adopted.  The Chicago Finance Committee is scheduled to hold a hearing on the proposed ordinance on Feb. 8.