CHICAGO — Ken Patel, vice president of the 7-Eleven Franchise Owners Association of Chicagoland, penned an op-ed earlier this week in the Chicago Sun-Times, detailing the negative effects should Chicago increase its tax on cigarettes.
“Unintended consequences,” Patel began. “That is the theme that runs throughout the proposal for a 75-cent-per-pack increase in the cigarette sales tax to help balance the City of Chicago’s challenging budget.”
Patel pointed out that 7-Eleven franchisees are small business owners and “far from corporate executives. Most work nearly every day, and many use public transportation to arrive early every morning.”
He said that a cigarette tax hike would have unintended consequences to both franchisees as well as Chicago residents.
“Even though our stores have diversified our offerings into many fresh foods, we still rely on traffic through our front door from customers patronizing 7-Eleven to purchase cigarettes,” he said. “But looming as an imminent threat to our thin margins, this proposal would raise Chicago’s cigarette tax to $7.42 per pack, the highest in the nation. We will certainly lose customers who know they can buy far cheaper cigarettes beyond the city limits or even beyond the state line.”
As a result, with cigarette customers shopping elsewhere for tobacco, Chicago will recover far less than the revenue it expects, both from cigarettes as well as other in-store items, which are taxed at Chicago’s 9.25% sales tax rate.
“When all the missed revenue generated by sales beyond cigarettes are totaled by multiplying the losses by Chicago’s 9.25% tax rate, Chicago taxpayers will join us, small business owners, as victims of the unintended consequences. We will lose thousands of dollars individually, but taxpayers stand to lose millions,” Patel said, adding he expects the revenue loss to impact jobs while leading to an increase in illegal cigarette sales.
“A tax that drives jobs out of the city of Chicago and encourages more crime does not make sense to me,” Patel concluded. “And it should not make sense to Chicago’s city council members. We understand the challenges Mayor Emanuel is facing, but another tax on local businesses and their customers is not the right approach. Do not create circumstances that bring unintended consequences.”