05/30/2012 09:06 am ET

Illinois Cigarette Tax Doubling: State Senate, House Approve $1 Hike

The Illinois Senate voted 31-27 Tuesday in favor of raising the state tax on cigarettes by $1, from 98 cents to $1.98 per pack.

The House approved the bill Friday, which now heads to the desk of Gov. Pat Quinn, who's been a vocal supporter of the tax hike since the earliest drafts of this year's state budget.

Quinn, joined by with several legislators who have championed the price increase, offered the revenue-generating proposal to help offset massive cuts necessary to balance the state's overextended budget, including, most recently, $1.6 billion in cuts to Illinois' Medicaid spending.

If Quinn signs off as expected, the $1.98-per-pack tax will make in-state cigarette prices the 15th highest in the nation, passing neighbors Indiana ($0.95 per pack) and Iowa ($1.36), but still taxing less than Wisconsin ($2.52 a pack, the seventh-highest rate in the nation).

Chicago and Evanston, presently the second and third most expensive cities to buy cigarettes at $3.66 and $3.48 respectively, will likely earn the top spots if an extra $1 is tacked on top of Cook County's $2-a-pack tax.

Critics of the plan say that the lower prices for cigarettes in border states could drive business out of Illinois and hurt small retailers. Amir Rasheed, owner of a BP Station in Rock Island, told KWQC News his business, close to the Iowa border, would suffer from a tax hike. Some Republican state legislators have made the same argument.

"Who would want to pay a dollar more for cigarettes in Illinois," Rasheed told KWQC. "You know you can go and get them cheaper in Iowa. Everybody is going to Iowa to buy gas in Iowa, everybody would want to buy a cigarettes there too."

But the revenue will surely be a boon for the struggling state. According to the Chicago Tribune, the tax hike would generate $350 million for the state, which would be eligible for a federal matching grant to bring in a total of $700 million.

The proposal now awaits a signature from Gov. Quinn, who is expected to approve the measure.

Flickr photo by Beyond Elements.