Reminder From Illinois: It Could Be Worse
I recently lamented Missouri’s lack of action compared to Kansas in reforming the state’s tax code and making the state more economically competitive. Despite this, I do give Missouri credit for not making things worse. On the other hand, Illinois has showed us what not to do. This week, the Illinois Legislature approved a bill that will raise taxes on cigarettes to $1.98 a pack. In comparison, Missouri has a 17-cents-per-pack tax on cigarettes.
I, and other members of the Show-Me Institute, have opposed raising taxes on cigarettes. However, if Illinois wants to send more of its residents fleeing to Missouri to buy cigarettes, then I will not talk them out of it. We could use the money. In fact, some legislators in Illinois fear that is exactly what will happen: “”We are going to lose revenue . . . from goods purchased across the border when people go to buy their cigarettes,” Illinois Sen. Kyle McCarter (R-Highland) said.
When the Show-Me Institute asked several visitors from Illinois whether they planned to stock up on cigarettes and other goods while in Missouri due to our lower excise taxes, many responded in the affirmative. It is likely that many more Illinois residents will feel the same way when this increased tax goes into effect.
So when people in Missouri advocate for increasing cigarette taxes, think about the state’s price advantage compared to some of its neighbors. Think about the potential customers that will be lost when the state no longer makes it worth their while to travel across the border to buy goods here. Also, think about how increasing taxes on cigarettes would harm the poor the most. Consider these things and be thankful that Missouri has not followed Illinois’ lead, at least, not yet.