One of the standard talking points against Governor Blagojevich’s proposal to slap a 75 cent per pack tax hike on cigarettes is that it will drive consumers to other states. Illinois has some long borders, and businesses worry they’ll lose even more customers.

But Iowa is now looking at jacking up its low cigarette tax rates, from 36 cents per pack (41st lowest in the nation) to anywhere from $1.116 to $1.36 per pack, which would make their taxes higher than Illinois’ current tax rate (the proposed 75 cent increase would put Illinois at $1.73).

Most of Iowa’s Senate Republicans oppose the proposed tax hike, but it may be gaining steam. The Iowa Senate is divided evenly between the parties.

“It’s the big lie,” said Senate Republican Leader Stewart Iverson of Dows. “We see we are going to be able to grow our way out of this without a tax increase.”

Iverson said a majority of Senate Republicans are opposed to increasing the cigarette tax, currently 36 cents a pack, but they can’t simply slam the door on the idea because the Senate is split, 25-25, between Democrats and Republicans. Health groups, meanwhile, are turning up the heat on the Legislature to approve a cigarette tax increase.