Why are Michael Bloomberg and Andrew Cuomo so determined to send tax revenues New York badly needs to other states?
In a new study, the Michigan-based Mackinac Center reckons that three out of every five cigarettes smoked by New Yorkers were bought in other states. Some are then resold here illegally.
Either way, it means the market is finding a way around state and city taxes.
Simple arithmetic explains why. As the Mackinac study points out, New York has the nation’s highest cigarette tax at $4.35 per pack. The city slaps another $1.50 on top of that, for a total tax of $5.85 per pack.
That creates a powerful incentive for people to buy their smokes elsewhere.
City smokers, for example, can cut their tax in half just by hopping over to New Jersey, where the tax is only $2.70 per pack, or up to Connecticut, where it’s only $3.
They might also try one of the Indian reservations upstate, where Gov. Cuomo turns a blind eye to tribes illegally selling cigarettes to those who do not live on the reservation. Or they can buy cigarettes smuggled in from North Carolina or New Hampshire, where the rates are respectively 45 cents and $1.78 per pack.
That means fewer sales for our businesses — and less tax revenue for New York city and state. The convenience-store industry estimates that evasion costs New York state $1.7 billion a year in lost cigarette-tax revenue.
In short, having the highest cigarette taxes in the land carries another price: New Yorkers are now subsidizing the budgets of other governors with their tax revenues.