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Tobacco taxes




Convergence of increased tobacco taxes, sales taxes and property taxes driving businesses to the breaking point


CHICAGO-Dozens of neighborhood small business owners are opposing the City of Chicago's unprecedented overreach into the free market in Illinois by proposing to mandate the minimum price of tobacco products, paired with an effort to raise another $6 million through additional taxes on cigars and smokeless tobacco as well as increase the age to purchase from 18 to 21. Under the mandate, all brands of cigarettes would be priced at a minimum of $11.50, plus making them ineligible for coupons or promotional specials.


"Where will this stop?" asked Rob Karr, president and CEO of IRMA. "Do consumers really want city government setting minimum prices for products? Do they really want city government taking away coupons? Chicago already has the highest tobacco taxes and the highest sales taxes in the nation, and amazingly, they still want more. Plus we're on the heels of the historic property tax increase they just imposed. There is a breaking point, and local business owners tell IRMA again and again they will not survive in the city."


"We need our police officers focusing on violent crime in our community, not on low-level offenses created by misguided tax policies," said Alderman Jason Ervin. "I urge my colleagues to consider examples like New York state where 57 percent of cigarettes are purchased unstamped on the black market due to high prices caused by significant taxes. Chicago is experiencing the same trajectory now and the ordinance before us substitutes yet another tax increase for the real solution of education, job training, and creating opportunities."


Pastor Roosevelt Watkins III, of Bethlehem Star M.B. Church, added, "The mayor's current proposal would have a negative ripple effect that would increase gang crime, further aggravate police and community relations, and strip opportunity from struggling young people with tremendous odds already stacked against them. Until we can stop driving employers out of the neighborhoods, people will continue to be impacted by the high unemployment rate and a worsening crime problem on our streets. Chicago cannot afford to cement its underprivileged to a permanent underclass."


"I understand that the city is searching for revenue to keep-up with spending, but tobacco products have been unfairly targeted," said Jim Bayci, a 7-Eleven franchisee in the Loop. "Beyond having the highest tobacco tax in the nation, Chicago banned the sale of menthol cigarettes in many neighborhood stores, electronic vaping products were recently attacked with the highest rates in the country, and now the City Council is considering minimum prices and massive taxes to the remaining products such as cigars and smokeless tobacco. When I lose tobacco customers to bordering communities, I also lose the associated sale of beverages, snacks and other items. It's a huge hit to 7-Eleven franchise owners across the city."


Tanya Triche, general counsel for IRMA, says it's not all about taxes, and she's equally concerned by the precedent of minimum pricing. "Having the city mandate minimum prices while banning any specials, discounts and coupons is a slippery slope. Anyone can see how this is just a start-the city could eventually take away coupons and other discounts for products they deem unhealthy such as soda, snacks, or certain kinds of milk and bread. Consumers should be justifiably concerned."


About the Illinois Retail Merchants Association 

One of the largest state retail organizations in the United States, IRMA serves as the voice of retailing and the business community in state government. Founded in 1957, IRMA represents more than 23,000 stores of all sizes and merchandise lines. From the nation's largest retailers to independent businesses in every corner of the state, merchants count on IRMA to fight for the best possible environment in which to do business in Illinois.



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