US: Chicago Tobacco Tax Struck Down

Source from:  Convenience Store Decisions 08/13/2020

The Illinois Supreme Court has struck down a Chicago ordinance that imposed local excise taxes on a number of tobacco products including cigars, smokeless tobacco, pipe tobacco and roll-your-own cigarette tobacco.

The Chicago ordinance was passed by the Chicago City Council in 2016 and sought to impose local excise taxes of 20-cents per cigar, $1.80 per ounce on smokeless tobacco products, 60 cents per ounce on pipe tobacco, and $1.80 per ounce on roll-your-own cigarette tobacco.

A broad cross section of the industry filed a lawsuit to overturn the ordinance. The plaintiffs included the Cigar Association of America, the National Association of Tobacco Outlets Inc. (NATO), Iwan Ries & Co. (a Chicago tobacco and cigar store), the Illinois Association of Wholesale Distributors, the Illinois Retail Merchants Association, the International Premium Cigar and Pipe Retailers Association, and Arangold Corporation, dba Arango Cigar Co.

NATO explained the ruling: “In the ruling, the Illinois Supreme Court held that Illinois state law specifically precludes a home rule city such as Chicago from adopting an excise tax on either cigarettes or other tobacco products unless the city had already adopted such a tax before July 1, 1993. While the City of Chicago had adopted a local tax on cigarettes prior to July of 1993, the city had not adopted a local excise tax on any other kind of tobacco product. As the Illinois Supreme Court states in the opinion, ‘we agree with plaintiffs that the statute allows only those municipal taxes on cigarettes or other tobacco products enacted prior to July 1, 1993’ and that ‘allowing unlimited future taxes on all tobacco-based products for those municipalities that merely imposed a single tax on one tobacco product prior to July 1, 1993, as the City [of Chicago] argues, undermines the legislative purpose [to prevent additional taxes on tobacco products].’”

In responding to the court ruling, Cigar Association President Craig Williamson and NATO Executive Director Thomas Briant stated that “this decision confirms our joint and long-held belief that the City of Chicago exceeded its authority in adopting excise taxes on other tobacco products. Retail stores can now focus on offering their customers the tobacco products they prefer without an unnecessary and burdensome local excise tax.”  Enditem