Chicago’s taxes will not be going up.
The Circuit Court of Cook County has ruled that the tax on other tobacco products (OTP), including cigars, is illegal. The tax would have been an additional 20 cents per cigar, $1.80 per ounce of smokeless and roll-your own tobacco and 60 cents for an ounce of pipe tobacco. This would have been addition to the 30 cent county tax and the state’s 10.25 percent sales tax.
However, a group led by Iwan Ries & Co. successfully argued that the law was pre-empted by an Illinois law. The state’s law indicates that a home rule charter city could adopt an additional tax on cigarettes or tobacco products, so long as the tax was enacted as of July 1, 1993. Chicago had a cigarette tax of July 1, 1993; but not a tax on other tobacco products, which the group argued meant it could not propose an additional tax.
The Chicago-based retailer 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 International Premium Cigar and Pipe Retailers Association (IPCPR), and Arangold Corporation–which is better known as Arango Cigar Co.
While the new law was passed in June, the tax never went into effect as the city agreed to wait to implement the tax until after the court made its decision.