TPA Urges Illinois to Cut Spending, Not Raise Taxes to Fix Budget Problems

The Taxpayers Protection Alliance is urging the Illinois legislature to balance the state’s budget by cutting spending rather than raising taxes.  Illinois Governor Pat Quinn (D) is proposing a $1 per pack increase in the cost of cigarettes and is planning to use the extra revenue raised to help close a budget short fall and fund Medicaid. The state legislature will be voting on the cigarette tax tomorrow (May 22). Proponents of Illinois’ cigarette tax hike believe it could raise hundreds of millions of dollars, but history has shown that proposition to be Fool’s Gold.  Raising excise taxes rarely produces the projected revenue.  Such tax increases drive purchases across state lines or to untaxed or lower-tax venues, like Native American territories and the Internet. This shift would cause Illinois retailers to lose revenue, with those losses becoming even more pronounced as cigarette purchases are often bundled with other items, such as food and beverages.

In February 2012, Governor Quinn announced that $2.7 billion in cuts had to be made to the state’s Medicaid system. But when a legislative working group came up with only $1.2 to $1.5 billion in reductions, Governor Quinn did not advocate identifying further savings. The Governor has now stated that part of the cigarette tax revenue will be used to make up the difference. However, the Illinois Policy Institute has proposed $1.7 billion in reforms to the state’s Medicaid system without raising taxes. The Illinois Policy Institute’s list of reforms can be found here.

Illinois taxpayers deserve fiscally responsible representatives, not ones who treat hard-earned tax dollars like monopoly money.  Governor Quinn’s proposal takes the easy way out by raising taxes instead of making the tough choice to cut spending and reform Medicaid. Illinois Republicans, led by House Republican Leader Congressman Tom Cross, should do the right thing by voting against the tobacco tax hike and advocating for real Medicaid reform.