Smoker's Cheat State

Cigarette Tax
By  | 

The state of Illinois' hopes of using increased cigarette taxes to help cure budget woes may have hit a roadblock, as more and more people are logging on to light up.

Legislators had hoped that a 40-cent tax increase per pack of cigarettes would raise about $300-million in revenue.

But the Internet of all things could prevent that from happening.

From books, to computers, and concert tickets, you can buy pretty much anything on the Internet nowadays, even cigarettes. And with a 40-cent increase per pack in Illinois... More and more smokers are turning to the Internet to avoid paying the high taxes.

“Why wouldn't you do it? You can save a lot of money,” says smoker Melissa Tragesser.

Mushtaq Siddiqui who owns MNS Smoke Shop has seen a steep decline in business since the tax hike and he says Internet sales are most likely part of the problem.

“Business has gone down 20 percent,” says Siddiqui.

And it’s not just a problem for local business, the state of Illinois could also end up suffering. Under the federal Jenkins Act, Internet cigarette sellers are required to provide state officials with names and addresses of their customers. States can then pursue the buyers to make sure they pay local state taxes. But a new report says most Internet cigarette vendors are ignoring the law, in fact almost 80-percent admit they don't comply.

“Tax dollars are used for education and health care so those areas will suffer,” says Siddiqui.

If you have bought cigarettes online and not paid state sales tax, Senator Syverson says don't get used to it.

Though the Jenkins Act is a federal law, Syverson says state legislators will put pressure on federal officials to crack down on these Internet cigarette sellers.