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    Cigarette Tax Increase on Tap for Illinois?

    Convenience store retailers fear business drop following federal tax hike.

    CHICAGO -- Following the 62-cent increase in federal excise taxes (FET) on cigarettes April 1, a pack of cigarettes sold in one city in Illinois' Cook County costs $9. But it may rise higher, as state lawmakers consider a state excise tax hike of $1 over two years, The Associated Press reported.

    The proposed $1 state tax increase follows a $2 hike made in Cook County three years ago. For Minuteman Convenience Centers' general manager Bill McCloskey, his monthly cigarette sales at one station in the county dropped from 110,000 packs before the previous increase to 17,000 after the hike, the AP reported. And with the FET increase, McCloskey's cigarette sales fell another 12 percent compared to a year ago. Cigarettes were not the only product affected at the store.

    "When you lose that sale on the cigarettes, you lose that sale on the gas, you lose that sale on the merchandise," McCloskey, who manages nine c-stores in the Chicago market, told the AP.

    Advocates of the increase argue it could raise nearly $1 billion for health care and reduce the number of smokers, but opponents—including the Illinois Association of Petroleum Marketers and Illinois Association of Convenience Stores—said cigarette prices already are too high, and people wanting them will travel across state lines for cheaper prices.

    In Chicago, cigarettes at a downtown 7-Eleven costs $9.35 a pack, according to the AP. Meanwhile, in Cook County, a pack of Marlboro cigarettes approaches $7, and in nearby DuPage, the pack price is $4.60, according to McCloskey.

    If the proposal becomes law, cigarette sales will decline, Bill Fleischli, executive vice president of Illinois Association of Petroleum Marketers and Illinois Association of Convenience Stores, told the AP.

    The administration of Gov. Pat Quinn expects a 16 percent drop in tobacco purchases due to the higher prices, the report stated. Fleischli said sales will drop 20 percent, forcing small businesses to close.

    "In these economic times, we can't do that," he told the AP.

    The proposal began last month by Quinn, who said it would help fill a budget shortfall of $11.6 billion by potentially raising $365 million by the second year.

    The current 98-cent state tax on a pack of cigarettes would increase 50 cents in September, and another 50 cents a year later, the report stated.

    Sen. Jeffrey Schoenberg suggestion of diverting revenue to hospitals and nursing homes could increase federal matching funds from the Obama administration, raising nearly $1 billion for the state, according to the AP report.

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