A proposed tobacco tax increase in Chicago that was scheduled to go into effect on July 1 has been delayed, as the city has agreed to wait until the 60th day after the Circuit Court enters a decision as to whether or not the city is allowed to implement such a tax, according to a statement from the International Premium Cigar and Pipe Retailers Association (IPCPR).
On May 31, a group led by Chicago retailer Iwan Ries & Co. filed suit against the city, claiming that the increase is in violation of state law. The store was joined by the National Association of Tobacco Outlets (NATO), the Cigar Association of America (CAA), the Illinois Association of Wholesale Distributors, the Illinois Retail Merchants Association, the IPCPR and Arangold Corporation–better known as Arango Cigar Co.
The group claims that the new tax on other tobacco products (OTP) is pre-empted by Illinois state law, which says that a home rule charter city can adopt a tax on cigarettes or tobacco products provided that the city adopted such a tax on cigarettes or tobacco products prior to July 1, 1993. The City of Chicago enacted a cigarette tax before July 1, 1993, but not an OTP tax, which in the group’s opinion prevents them from being able to adopt an OTP tax.
The city’s tax increase tacks on 20 cents per large cigar and little cigar, $1.80 per ounce of smokeless tobacco and roll-your-own tobacco, and $0.60 per ounce of pipe tobacco. For premium cigar smokers, that means that a cigar with a suggested retail price of $9.50 will now likely retail for around $12.68 in Chicago based on halfwheel estimates, a figure that includes a total of 10.25 percent in sales taxes, 30 cents to the county and 20 cents to the city.