Border towns stung by hike in Illinois cigarette taxes

DANVILLE, Ill. -- A smoker for 50 years, Dee Smith has no intention of quitting when the price of cigarettes jumps by 40 cents a pack on July 1.

"I'll go to Indiana to buy 'em, just like everyone else around here," the 74-year-old Smith said during a cigarette break outside a laundromat in Danville, about five miles from the state line.

The cigarette tax hike, along with the elimination of a tax break for businesses and an increase in the tax on riverboat gambling, are expected to generate $600 million for the state -- among an array of measures approved by Illinois lawmakers to help close a $1.35 billion budget deficit.

But the three measures could hurt towns like Danville that are close to states with lower taxes and better incentives for businesses.

Convenience store operators said they already have seen a swift drop in cigarette sales because of the tax hike, even though it does not take effect for three weeks. And development leaders say the lost tax incentive for businesses will hamper efforts to lure new companies to Illinois.

"Certainly we will see losses from this," Danville Mayor Robert Jones said. "Hopefully, we'll be able to handle some of those shortfalls without being devastated."

The law increases the total tax to 98 cents a pack, meaning a pack-a-day smoker would pay $358 in state taxes annually, a $146 increase. The cigarette tax in Indiana is 15 1/2 cents per pack.

Tiffany Lyons, assistant manager at a Clark gas station in Danville, said cigarette sales dropped noticeably after the tax increase was passed. Her store, empty of customers on a recent afternoon, had sold only 200 packs in the last week, compared to about 2,000 the week before the tax increase was announced, she said.

"People have been grumbling a lot," Lyons said.

At a Citgo station in Metropolis, eight miles from the Kentucky border, Glenda Dayless said a pack of Marlboros would increase to $4.60 when the tax increase takes effect.

The same pack would cost about $1 less in Kentucky.

Too many packs

Klemens, of the revenue department, said the state would increase enforcement along the border to prevent people from bringing large quantities of cigarettes into Illinois. Anyone caught with more than 10 packs of cigarettes purchased outside of Illinois is subject to a $10-per-pack civil penalty, he said.

Officers will not stop and search cars solely to check for cigarettes, he said, but would look for violations in the course of speeding and other stops.

"This is not going to be like an East Germany situation," Klemens said. "This is still the United States of America. But we'll work with local law enforcement who may have an interest in helping their local businesses."