Rahm to push e-cigarette ‘sin tax’ hike, product restrictions

Rahm to push e-cigarette ‘sin tax’ hike, product restrictions

The proposed City Council ordinance would hike Chicago’s sales tax on liquid nicotine and mandate that stores keep vaping products below the counter.

Chicago Mayor Rahm Emanuel plans to introduce a City Council ordinance that would  hike the city’s sales tax on e-cigarettes and require retail stores to place all vaping products below the counter, according to the Chicago Sun-Times. The ordinance would increase the tax on e-cigarettes to $1.50 from 80 cents per container, and to $1.20 from 55 cents per milliliter of liquid nicotine.

While Emanuel has declared that the ordinance is aimed at “supporting youth to make healthy choices,” it’s not clear that taxing e-cigarettes at a higher rate would improve health outcomes. In fact, a 2016 study by the nonpartisan Tax Foundation found that imposing punitive taxes on e-cigarettes increases barriers to less harmful alternatives for cigarette smokers looking to quit.

Chicago introduced its e-cigarette tax in 2015, projecting $1 million in annual revenue. And while officials often cite public health concerns when pushing “sin taxes,” Chicago’s e-cigarette tax came on top of a deluge of tax and fee increases aimed at addressing its severe pension problems. The same can be said for Cook County’s notorious “soda tax,” which the county originally pitched as a public health initiative. Cook County Board President Toni Preckwinkle admitted later that the tax, which was repealed in October 2017, had been primarily about revenue.

The state’s 2012 cigarette tax increase offers an example of the negligible impact sin taxes have on health outcomes. In the period following that tax hike, according to the most recent data from the Illinois Department of Public Health, the percentage of smokers in Illinois dropped to 15.1 percent from 18.6 percent. That decline amounts to just half a percentage point higher than the nationwide trend. In fact, data from the Centers for Disease Control and Prevention show cigarette use in Illinois and the nation has declined steadily since at least 1990 – long before the state’s 2012 cigarette tax hike.

State, county and local cigarette taxes combine to make the Windy City’s overall cigarette tax burden the highest in the nation, at $6.16 per pack. Many tobacco users in Illinois respond to those taxes by simply purchasing cheaper tobacco products across state lines. But a citywide e-cigarette tax hike would be even easier to sidestep: One would only have to cross city lines to find cheaper e-cigarette products.

Beyond Chicago’s sin taxes, lawmakers statewide have made paternalism something of a habit. According to a study by the Mercatus Center, Illinois ranks as the seventh-most paternalistic state in the union. Paternalistic policies, defined by the study, do three things: First, they “restrict the availability of certain goods deemed harmful.” Second, they “increase the prices of undesirable behaviors or lower the prices of desirable ones.” And finally, they “mandate individuals do certain things.”

Emanuel’s pending tax hike follows an effort by state lawmakers to raise the legal age of tobacco and e-cigarette purchases to 21. However, Gov. Bruce Rauner vetoed that measure on Aug. 24.

Taxation will not cure Chicago’s public health problems. But the mayor’s proposal does bring another problem to light: Officials in Chicago and Springfield have grown dependent on routine tax hikes. And that’s a habit they ought to kick.

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