The 90 cent per cigar tax increase proposed by Chicago Mayor Rahm Emanuel might not come to fruition, as it could be in direct opposition to Illinois state law.
In January, Emmanuel submitted a proposal that called for a tax ncrease on four types of tobacco: 90 cents per large cigar, 15 cents per little cigar, $1.80 per ounce of smokeless tobacco and $6.60 per ounce of roll-your-own tobacco. For premium cigar smokers, that means that a cigar with a suggested retail price of $10.50 would go from selling for around $14.88 in Chicago to $16.68 based on halfwheel estimates.
Revenue from the new tax would be used to fund a new one-week transition program for all incoming high school freshman and a two-week program for eighth grade dropouts, all of which will come to a total cost of $6 million. The tax would be on top of a state tax of 36 percent tax on the wholesale level and a 30 cent per cigar tax imposed by Cook County.
However, Illinois state law says that a home rule municipality may not impose an excise tax on tobacco products unless it had been doing so prior to July 1, 1993, and the city of Chicago did not have a tax on other tobacco products (OTPs) such as premium cigars before that date. Additionally, a 2011 proposal to the Chicago City Council requesting they support the Illinois Legislature’s amendment of that law failed, while bills in the state legislature in 2011 and 2014 that would have given home rule municipalities the ability to tax OTPs both failed.
The matter will come before the Chicago Finance Committee on Feb. 8.