A new analysis by the Washington-based Tax Foundation finds that nearly 61 percent of cigarettes sold in New York are smuggled in from other states, the highest rate in the nation. The next highest smuggling rates are in Arizona, New Mexico, Washington and Rhode Island, according to the group.
Illegal cigarette sales are on the rise across the country, with increasing excise taxes creating “lucrative incentives for black market trafficking between states,” the Tax Foundation said. New York has the highest cigarette taxes in the country at $4.35 per pack. New York City charges an additional $1.50 per pack.
“Public policies often have unintended consequences that outweigh their benefits,” Scott Drenkard, Tax Foundation economist, said in a statement. “Dramatic increases in state cigarette taxes have yielded additional revenue for priorities like public health, but have also fueled the rise of organized crime and law enforcement corruption.”
Cigarette smuggling in New York has increased 170 percent since 2006, and the tax rate has risen by 190 percent, the Tax Foundation found. While most smuggling cases involve criminals purchasing discounted packs from low-tax states to sell in high-tax states, they can also include counterfeit state tax stamps, fake versions of legitimate brands, hijacked trucks or bribing officials.
The Tax Foundation used data on illegal cigarette sales from the Mackinac Center for Public Policy, a Michigan think tank. Data is from 2011.