Illinois Legislature Voting on Increasing Tax Collections in Missouri

Illinois is voting tonight on whether to raise their cigarette tax by a full $1. If this passes — and I don’t care either way, as a non-smoker who doesn’t live in Illinois — there can be no doubt it will be good for tobacco tax collections in Missouri. Nobody can doubt that at least a small portion of Illinois residents will shift their tobacco purchases to Missouri and other nearby states, leading to more business and higher tax collections here, but without any increase in Missouri smokers’ costs.

I would guess that most Illinois residents who can easily purchase smokes or gas in Missouri — such as the many St. Clair and Madison County residents who work in downtown St. Louis — already do so. The current tax difference on cigarettes is large enough to distort economic decisions. If the Illinois legislature increases it by another $1, the marginal changes might not be as large as one would expect, but they will certainly exist, and to Missouri’s benefit.