A new study by the conservative Tax Foundation claims that 56.9 percent of all cigarettes sold in New York were illegally imported from out of state sources. The foundation’s report says the surge in cigarette smugglingis directly correlated to New York’s tax of $4.35 per pack sold, the highest cigarette tax in the nation. Cigarette taxes are even higher in New York City ($5.85 per pack).
“Public policies often have unintended consequences that outweigh their benefits. 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,” the report reads. “Growing cigarette tax differentials have made cigarette smuggling both a national problem and a lucrative criminal enterprise.”
As recently as 2006, New York had only the fifth-highest smuggling rate. But in recent years, the state cigarette tax has jumped 190 percent. Conversely, smuggling rates have jumped by 59 percent during the same period.
According to the study, New York’s smuggling rates are closely followed by Arizona (51.5 percent), New Mexico (48.1 percent), Washington (48 percent), and Wisconsin (34.6 percent).
The American Lung Association criticized the study’s claims, pointing out that the data was collected by the Mackinac Center for Public Policy, a Michigan-based conservative think tank that has received funding from the tobacco industry. On its own website, the ALA says that higher state taxes on cigarettes have been shown to reduce overall smoking rates.
The group’s director of national policy, Thomas Carr, told CBS that the smuggling issue “is a lot smaller than the study lets on,” adding that, "Tobacco companies are generally against higher tobacco taxes."
