number of tobacco companies and trade groups are trying to snuff out a pending city of Chicago ordinance, alleging the ordinance burdens them with collecting
sales taxes for non-cigarette forms of tobacco, while at the same time usurping
rightful state authority over such taxes.
seller Iwan Ries & Co., of Chicago, and Arango Cigar Co., of suburban
Northbrook, filed action May 31 in Cook County Circuit Court against the city
of Chicago and Acting City Finance Department Comptroller Erin Keane.
following organizations joined with the companies in the action: Cigar
Association of America; Illinois Association of Wholesale Distributors;
Illinois Retail Merchants Association; International Premium Cigar and Pipe
Retailers Association; and National Association of Tobacco Outlets.
fire was lit beneath plaintiffs in March, when the Chicago City Council enacted
a sales tax on pipe, chewing and smoking tobacco, as well as on cigars, to take
effect July 1. The city already had a sales tax in place on cigarettes.
want a judge to declare the tax illegal and prohibit the city from applying the
tax, because they allege it violates a 1993 state law prohibiting a home rule
municipality, such as Chicago, from taxing non-cigarette tobacco products after
July 1, 1993.
contend the new tax ordinance will subvert the “State of Illinois’ ability to
maintain primary control over the revenue stream derived from the taxation of
the ordinance will allegedly defeat the purposes of the 1993 law, one of which
was to preserve jobs in the tobacco industry by limiting the number of
companies taxed at both the state and municipal levels, according to
claim they will incur “substantial” non-reimbursable costs by having to
implement an administrative system to track tobacco transactions subject to the
tax, then having to collect and remit the taxes to the city. However,
plaintiffs say their problems won’t end there, as they will lose customer goodwill
and business. Plaintiffs add they will have to spend money “developing a public
relations strategy to address the real and potential loss of sales.”
the end, the tax will depress plaintiffs’ income, which in turn will lower tax
revenue to the state and lead to job reduction in the tobacco industry, the
noted that if they do not comply with the ordinance, they then could face
liability for the unpaid taxes and lose their business licenses.
hearing to address the injunction request is set for June 23 before Cook County
Circuit Judge Alexander P. White.
Philadelphia-based global firm of Duane Morris, which has a Chicago office, is
representing the plaintiffs.