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Quinn’s cigarette tax idea would gut Hynes proposal
Wednesday, Sep 9, 2009 - Posted by Rich Miller * MAP grants have been cut in half, which has outraged many college students and administrators. But Gov. Pat Quinn now wants to raise cigarette taxes by a buck a pack to cover the shortfall…
There is a political angle outside of the need for more MAP grant funds, of course. Quinn’s Democratic primary opponent Dan Hynes wants to raise the price of cigarettes by a dollar a pack to pay down the backlog of old bills. If approved, this Quinn idea would gut Hynes’ $300 million bill-paying proposal and force the challenger to come up with another plan. Also, there’s a $200 million shortfall in the MAP program. Quinn’s proposal would raise $100 million more cash than necessary to close the gap - perhaps making it even more politically suspect. …Adding… The Quinn people say the $300 million would all be used because of the strong need for the grants. * Quinn also said his income tax hike push may be delayed until after the primary with Hynes…
The governor also wants a new but so far unexplained “jobs plan” as well as ethics reform approved during next month’s veto session. We should know more about all of this after today’s leadership meeting, which was scheduled to begin at 1:30 this afternoon.
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- siriusly - Wednesday, Sep 9, 09 @ 1:54 pm:
Politically speaking this is all upside for Quinn. By agreeing to not even ask for the income tax hike in 2010 he probably makes life better for all the GA members. Although, the FY ‘11 budget is going to be even worse than ‘09 without it.
The MAP grants are a huge issue for GA members, even Republicans. I think that the legislators don’t want to be seen as pushing needy kids out of college because they cut the MAP program.
I don’t want to over sell this, but I think this may be one of Quinn’s smartest moves to date. TBD of course.
- wordslinger - Wednesday, Sep 9, 09 @ 1:58 pm:
I smoke and am under no illusion that this won’t happen one way or the other.
I doubt if it will raise the revenue they’re hoping for. Sixty bucks a carton differential is a lot. Indiana and Missouri are bargains and worth the trip for a good chunk of the population for gas, smokes and beer. Might hit the boats there, too.
- TJ - Wednesday, Sep 9, 09 @ 1:59 pm:
Sheesh…. thank God I don’t smoke anymore…. a pack of smokes where I live is already $8.20 or so after taxes, and the only reason I know that is because I was behind someone at a convenient store who bought one. I honestly had no clue it was THAT expensive…. back at my old smoking pace a decade or so ago, I’d be burning through about $200 a month as it is. If that alone’s not enough to get someone to quit, I don’t know what is….
- Michelle Flaherty - Wednesday, Sep 9, 09 @ 2:11 pm:
Ummmm…
I think that’s another flip. At the State Fair ribbon cutting Quinn said he wanted lawmakers to revisit the tax hike during the fall session.
- Anon - Wednesday, Sep 9, 09 @ 2:13 pm:
==The governor also wants a new but so far unexplained “jobs plan”==
Somebody has to say it: “Hey, look! A kitty!”
- The Doc - Wednesday, Sep 9, 09 @ 2:14 pm:
Cowardly, particuarly coming from a governor that recites the “I make tough choices” canard ad nauseum. And he’s completely abandoning any pretense that the funding mechanism should at least roughly correspond to the revenue target (i.e. motor fuel taxes for transporation projects).
That’s before taking into account the law of diminishing returns, which tends to elude the tax-happy brand of pols like Daley. Betcha a dollar his rosy revenue projections are based on data that fails to take into account potential changing patterns of behavior.
I’m not a smoker, and think this is a poor idea.
- cassandra - Wednesday, Sep 9, 09 @ 2:22 pm:
But wait. In June, Quinn told us that the crater in the state budget for the coming year would require a hike in the income tax in addition to some cuts..or doomsday would fall in short order.
Have state revenues improved? It doesn’t seem as though Quinn has made many cuts, if any. A few hundred layoff slips have gone out, a few highly paid nonunion folks are taking furloughs, but isn’t that about it. And layoff slips don’t mean layoffs will actually happen.
It would be good to have a primary with two (or three or four if you include Repubs) distinct viewpoints on how to manage the state budget (VAT type tax vs. income tax, progresive vs. flat, bigger vs. smaller state bureaucracy, lavish union contracts vs. less lavish) and so forth but if Quinn suddenly decides he can make it on existing revenue plus a few furlough days, after all that caterwauling, doesn’t that give him some credibility problems in the primary.
Not that I’m not grateful for the reprieve, if there is one. I am.
- Irish - Wednesday, Sep 9, 09 @ 2:43 pm:
When we these economics wizards get it through their heads that they are driving people to make their purchases out of state or on the internet? Cigarettes are one of those items that gets someone in a store and they end up purchasing something else. It would be interesting to know exactly how much has been lost in the secondary purchase statewide because people are going elsewhere for cigarettes, gas, gambling and soon alcohol.
I am no proponent of legalizing marijuana but maybe that would be the best way to eliminate it’s sale in Illinois. Legalize it and allow the Gov and the GA to tax it and pretty soon everyone will be driving to Iowa, Missouri, Wisconsin, and Indiana to buy it.
I’ll say it again. We are going to end up with an income tax increase and none of these stop gap taxes, fee increases etc. will be rolled back when that happens. Watch the GA go on a spending spree then!
- KeepSmiling - Wednesday, Sep 9, 09 @ 3:01 pm:
Here we go again. Somebody cries for a program, and someone else must pay to make sure we keep it.
But Quinn, how about some honesty? If the GA isn’t going to begin debating an income tax increase until after the Feb primaries, then it’s remarkably unlikely we’ll see action on an income tax until after the general elections - so maybe Spring 2011.
- VanillaMan - Wednesday, Sep 9, 09 @ 3:05 pm:
This is a declining tax base. Raising the tax will only decline it further. Businesses with this product for sale will see their business also decline, which will cut into the amount of taxes collected from these businesses.
Why are taxes placed on cigarettes? For the money, or to curb smoking? For too long politicians thought this tax was a great twofer, and now the Tax has gotten downright silly. Who is the addict here? The smokers or Illinois?
Quinn’s proposal is the kind made by a governor trying to win an election. These proposals are almost always laughable, if not counterproductive. Illinois has gotten way beyond easy solutions like these.
- Bill - Wednesday, Sep 9, 09 @ 3:10 pm:
This will never pass in the veto session. It is more smoke being blown by Quinn. ” …Well, I tried but the legislature just wouldn’t go along…”. Seriously, does anyone buy anything Quinn tries to sell anymore.
Once again, if he’s going to raise revenue is this THE most crucial need in this state? Is MAP funding more important than not letting a bunch of convicts out of jail? Than not closing mental health centers? Than early childhood education? Maybe he figures the college students and their parents are more likely to vote for him than these other constituencies and he is afraid of losing them. Who knows with this guy?
- Charlie Wilson - Wednesday, Sep 9, 09 @ 3:13 pm:
I think its a great idea, and we can use the extra $100 mil to advertise cigarettes on college campuses. Brilliant!
- Cig Tax - Wednesday, Sep 9, 09 @ 3:14 pm:
The only reason Quinn can even think about a cigarett tax is that Emil Jones is not Senate President anymore. He killed every cigarett tax hike that came along.
- dupage dan - Wednesday, Sep 9, 09 @ 3:25 pm:
What’ll it be next week? Gotta raise the fish license fee to raise money to pay for new laptop computers for CMS?
- Ghost - Wednesday, Sep 9, 09 @ 3:29 pm:
so at what point does a cigarrette tax actually produce negative revenue, and why do they alwasy assume the same number of packs will sell if you increase the price? basic economics tells us as you increase price you run the risk of decreasing sales.
heck, lets just add a 1,000 tax to every pack and fund the State off of cigarrette sales! It is the ultimate magic pony behind gambling…. which always magically increases revenue instead of just canabolizing spending that would happen elsewhere.
- zatoichi - Wednesday, Sep 9, 09 @ 3:31 pm:
Raise the tax to $10 a pack. I don’t smoke and could care less about it. The problem is this simply provides another band aid approach that allows the bigger revenue issue to simply slide by while hoping the economy picks up to solve the issue without an income tax increase. Smoking, gambling, and beer increases make a nice headline, but they are just spits in the wind toward resolving the bigger picture.
- hey cassandra - Wednesday, Sep 9, 09 @ 3:51 pm:
Doomsday was averted by borrowing 3.4 BILLION to make the required pension payment, which freed up that amount of GRF to pay for state programs. Not the best fiscal option ever, but better than denying vulnerable people the services they need to survive in this tough economy. A tax increase would have been/would be a wiser option, but the Governor agreed to the bond sale to avoid doomsday — which really would have occurred without the extra cash.
- dupage dan - Wednesday, Sep 9, 09 @ 4:02 pm:
hey cassandra,
Doomsday was not averted-merely delayed. That was done to get the horror that is this states’ fiscal situation off the front pages and back with the nose hair tweezer ads.
PatQ can then spin his magic (such as it is) to try to box in his opponents so that he can ascend to the throne in an election. It seems all his actions are geared towards that.
And he’s not very good at it either.
- No More Taxes!!! - Wednesday, Sep 9, 09 @ 4:10 pm:
When will the legislators fill the pinch in their office allotment, per diem, etc.? When will the Governor look at the Blagovich hires that were not qualified and whose jobs were created? Governor Quinn needs to trim the fat before taxing again. I am not a smoker but how many times are we going to go to the cigarette well?
- Cindy Lou - Wednesday, Sep 9, 09 @ 4:13 pm:
Anyone know how much or if all the sales of smokes were affected after the federal tax hike? That was like 60 cents. Are sales still holding with that increase?
I’m way down in smoking (yay me) but the state would still get a bit extra off me if they decide to increase for this. Can’t help wondering though what will be next? As each short turns up are we going to find something else/new to tax, that is anything and everything but a income tax increase?
- 4 percent - Wednesday, Sep 9, 09 @ 4:18 pm:
Sounds like Quinn read Dillard’s press release calling for the legislature to pass a jobs package in veto session. I guess imitation is the sincerest form of flattery!
Dillard hit Quinn for failing to appoint members of his economic recovery task force - has it happended yet because the report was due LAST WEEK!
- Cassandra - Wednesday, Sep 9, 09 @ 4:26 pm:
But Quinn claimed that the deficit was much, much higher than $3.4 billion, although he kept changing his description of exactly how high. He gave the very strong impression that the state could not survive the fiscal year without a tax increase. I think an opponent could reasonably make the case that he was exaggerating the deficit in order to fatten state coffers ahead of an election campaign (pay to play is still very much alive and fatter state coffers equal more state contracts for “campaign contributors” and more and high-paying Democratic patronage jobs) and/or that he and his budget folks can’t count.
- Rich Miller - Wednesday, Sep 9, 09 @ 4:38 pm:
Cassandra, they made up much of the rest by simply not paying vendors until next fiscal year.
Pay attention, please.
- Cindy Lou - Wednesday, Sep 9, 09 @ 4:40 pm:
I think one example, Cassandra, is pushing back payments to vendors/providers. Deficit still there, just not now due yet. Pushing payments from say 6 to 9 months or 9 months to 12 months did not make the money due/needed go away.
- Cindy Lou - Wednesday, Sep 9, 09 @ 4:41 pm:
oops, Rich was quicker than I
- dupage dan - Wednesday, Sep 9, 09 @ 4:44 pm:
“made up” being the operative words. It seems a bit disingenuous to claim your deficit is smaller simply by not paying vendors until next fiscal year. Those vendors will be expecting to be paid for next year, too. I don’t think my bank would go along w/that plan. Why should we?
- Responsa - Wednesday, Sep 9, 09 @ 4:59 pm:
I don’t mean in any way to offend or to be perpetuating stereotypes, but this approach by both Hynes and the Gov. sort of surprises me. In truth aren’t an awful lot of smokers these days the hourly wage, blue collar union guys and gals and city and state laborers who are the heart of the machine’s constituency? Are they so sure of votes that they can afford to tick these people off over the threat of a big ciggie tax?
- steve schnorf - Wednesday, Sep 9, 09 @ 7:28 pm:
Folks, they do take into account the likely decline in cigarette purchases resulting from a tax hike. The analysis may not be as good as usual right now because there have been multiple state and federal hikes close together, and that makes the data necessary to run out scenarios somewhat skimpy, but both GOMB and COGFA do their best job of predicting it.
- CircularFiringSquad - Wednesday, Sep 9, 09 @ 8:21 pm:
Looks like StateWideTom and his senate ally got stumped again….go tell the college kids you are a no vote for the 2nd semester….opps bet even Commando Crusts.Kirk and gags Brady don’t agree….