Report details the lucrative criminal enterprise of buying cigarettes in low tax states to sell on the black market where taxes are higher
A majority of the cigarettes for sale in New York are illegally smuggled into the state, according to a report out Wednesday from the conservative research group the Tax Foundation.
According to the report, 56.9% of the cigarettes sold in New York—the highest importer of smuggled cigarettes—originated from out of state. Since 2006, cigarette smuggling in the state has risen sharply, by 59%, in tandem with a massive hike in cigarette taxes of 190%. New York state now has the highest cigarette taxes in the country, at $4.35 a pack. Residents of NYC must also pay an extra $1.50 per pack.
Cigarette taxes rose in 30 states and the District of Columbia between 2006 and 2012. Hiking tobacco taxes has been shown to make a dent in smoking rates—in particular among younger smokers—but also creates sometimes sharp state-to-state price differentials that incentivize illegal smuggling.
The state with the highest rate of outbound cigarette smuggling is relatively low tax New Hampshire, which is only a short drive away from New York.