Tuesday, July 7, 2015

Modern Day Smuggling is Taking Over the New York State Cigarette Industry

Imagine that high tax rates equal high rates of smuggling.

Jonathan Nelson informs:
New York’s cigarette taxes are the highest in the nation, at $4.35 per pack. Some New Yorkers naturally will seek to avoid cigarette excise taxes, which raise the average price of a pack of cigarettes from about $8.50 to $12.85, even at the cost of breaking the law. People are tempted to buy cigarettes in a low-tax state such as North Carolina and sell them in New York.
The black market created by cigarette taxes is very real. A report from Scott Drenkard of the Tax Foundation found a positive relationship between cigarette smuggling into a state and the state’s cigarette excise tax rate. High tax rates produce an incentive for smugglers to purchase cigarettes in a low-tax state, and then sell them for a profit in a high-tax state.
New York State has the highest smuggling rate (58 percent of all consumption is smuggled) in the country. It should not be a surprise that over half of the cigarettes consumed in New York are smuggled from outside the state when its cigarette tax is over $1 per pack higher than neighboring states. The cigarette tax in New York may lower consumption, but it encourages smuggling.
 -RW

3 comments:

  1. In other news; dog bites man.

    ReplyDelete
  2. In New York you pay the ciggie tax or die.

    ReplyDelete
  3. In New York you pay the ciggies tax or a cop sits on your neck and kills you

    ReplyDelete