Cigarette Tax Hike Revenue Falls Short Of Goal

Jun 20, 2013

Illinois’ dollar-per-pack cigarette tax hike took effect a year ago this month. But the the Commission on Government Forecasting and Accountability says it's expected to fall $130 million short of initial revenue estimates. 

The increase, which hiked the state’s 98-cents-per-pack tax to $1.98 last June, is expected to bring in about $212 million in additional revenue for the current fiscal year, which ends June 30.

That’s well short of the $350 million in additional revenue originally projected.

That means it won’t raise quite as much as money for school capital projects. Money from the tax hike also goes to the Healthcare Provider Relief Fund to help cover the costs of Medicaid.

The report says a decline in sales typically follows a significant tax increase. But the report also says another reason for the failure to meet projections is that consumers stocked up prior to the tax increase in 2012.