NEW YORK: New York ranks as the number one importer of smuggled cigarettes in the United States and has seen cigarette smuggling rise 62 percent since 2006, according to data from the Tax Foundation.
“One consequence of high state cigarette tax rates has been increased smuggling as criminals procure discounted packs from low-tax states to sell in high-tax states,” explains the Tax Foundation’s report titled, “Cigarette Taxes and Cigarette Smuggling by State, 2013.”
“New York is the highest net importer of smuggled cigarettes, totaling 58 percent of the total cigarette market in the state,” explains the report. “New York also has the highest state cigarette sales tax ($4.35 per pack), not counting the additional local New York City cigarette tax (an additional $1.50 per pack). Smuggling in New York has risen sharply since 2006 (+62 percent), as has the tax rate (+190 percent).”
After New York, the states with the highest inbound cigarette smuggling rates are Arizona (49.3 percent), Washington (46.4 percent), New Mexico (46.1 percent), and Rhode Island (32.0 percent).
The highest outbound smuggling rates are in New Hampshire (28.6 percent), Idaho (24.2 percent), Virginia (22.6 percent), Delaware (22.6 percent), and Wyoming (21.0 percent).
“Smuggling rates generally rise in states after they adopt large cigarette tax increases,” explains the report. “Smuggling rates have dropped in some states, however, often where neighboring states have higher cigarette tax rates.”
“Smuggling takes many forms: counterfeit state tax stamps, counterfeit versions of legitimate brands, hijacked trucks, or officials turning a blind eye,” explains the Tax Foundation. “The study’s authors, LaFaive and Nesbit, cite examples of a Maryland police officer running illicit cigarettes while on duty, a Virginia man hiring a contract killer over a cigarette smuggling dispute, and prison guards caught smuggling cigarettes into prisons.”