If you enjoyed a smoke in New York today, more likely than not the cigarette you lit up got here illegally. For that, you can thank our high tobacco taxes.
Nearly 57 percent of cigs consumed in New York are brought in illegally, according to a new report from the Tax Foundation, based on an analysis by the Mackinac Center for Public Policy. That’s the highest percentage of illegal smokes of any state.
It’s no coincidence that having the highest rate of illegal smokes coincides with having the nation’s highest taxes on cigarettes. At $4.35 a pack, New York’s cigarette tax outstrips the next highest state (Rhode Island’s $3.46 levy) by 26 percent. And that doesn’t count the $1.50-a-pack tax New York City slaps on top of that, bringing the total to $5.85 in Gotham.
New York isn’t the only state with high levels of smuggling. The report found that, in general, states with high cigarette taxes have the most smuggling. Why? Because it gives smugglers an incentive to buy smokes in, say, Missouri, where the levy is 17 cents a pack, resell them illegally in New York under a high market price caused by high taxes — and pocket the difference.
“Public policies often have unintended consequences that outweigh their benefits,” the report says. “One consequence of high state cigarette tax rates has been increased smuggling.”
Bottom line: New Yorkers are getting more than half their cigarettes from a thriving black market. And this black market robs the state of the revenues it would gain if it weren’t undercutting sales from legitimate outlets, such as bodegas.
Talk about a policy going up in smoke.