Jun 11, 2012
Illinois Smokers Buying Up Cigarettes Before Tax Hike
SPRINGFIELD, Ill. -- A recent hike in the Illinois cigarette state excise tax appears to be causing a run on cigarettes as adult smokers stock up before having to pay $1 more per pack. The increase, to $1.98 per pack, goes into effect June 24.
According a story in the Journal Star, some convenience stores are running low on cigarettes, and owners say the state is making it difficult for them to resupply. Specifically, they said the state is restricting the distribution of tax stamps that must be attached to cigarette packages before they are sold at retail.
William Fleischli, executive vice president of the Illinois Association of Convenience Stores, said people are buying in advance of the increase. "It's not Warren Buffett buying 10 million cigarettes," Fleischli said. "It's a guy that usually buys one carton. Now he wants to buy two or three, trying to save $18 or $20.
"We are running out of product. They (the Department of Revenue) won't give the distributors any more cigarette stamps to buy, so the distributors can't put the stamps on them, and the distributors can't sell them to us," he added.
However, Department of Revenue spokesman Greg Rivara said the state actually increased the number of stamps available to distributors by 25 percent to accommodate both a seasonal increase in demand and an expected run on cigarettes in anticipation of the tax increase, according to the news report.
In early May, while lawmakers still were debating whether to increase the cigarette tax, the department said it would limit distributors to their usual supply of stamps. They said it was intended to discourage a run on stamps if the tax were increased.
"There was some outrage to the state from distributors that indicated the plan wouldn't include the seasonal increase," Rivara said. "The seasonal increase in June is the largest of the year. By making available 25 percent more (stamps), the idea was that added amount should accommodate the seasonal increase in demand, plus the anticipated demand (to beat the tax hike)."
The Illinois Association of Wholesale Distributors disputes that notion, the report stated.
"The sudden, and what we believe to be the unfair, allocation of stamp availability since early May is now beginning to disrupt the availability of cigarettes to retailers and ultimately customers," the association said in a statement. "On behalf of consumers and retailers throughout the state, we are working to assure that product is available as needed up to the date of the doubling of the cigarette tax."
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