Chicago Mayor Rahm Emanuel is proposing to increase the city’s cigarette tax by $.75 a pack, which would raise the combined local and state tax rate to $7.42 a pack- the highest in the nation. The video above, by Fox 32, features the Heartland Institute’s John Nothdurft and his brief, yet powerful, opinion on the proposed tax increase.
A tax increase would only cause more people to hop over state lines in order to get cheaper cigarettes; the city has already seen a dramatic decrease in tax revenue from the last cigarette tax hike, and the theme is likely to continue.
Emanuel argues that a tax increase would strengthen the incentive for smokers to quit, and would also help to pay off a budget shortfall. The extra money will also be used to fund some social programs in the city of Chicago. Does Chicago really need to add this to their list- city with highest prices on cigarettes due to extreme taxation?
Chicago is facing some budgetary difficulties. Next year the city is required, by state law, to make a $600 million contribution to stabilize police and fire pension funds with liabilities that are only covered at 30.5% and 25% right now. Emanuel calls for a Chicago property tax increase as well, but wants to hold off on the pension stabilization until 2023, to give the city more time.
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