Is New York’s high cigarette tax rate why the Empire State tops the smuggler list?

January 20, 2013


Cigarette packsI used to smoke. Lucky (no pun intended) for me the hubby is a nonsmoker and I gave up the nasty habit for him.


Even luckier for me, years ago when I did smoke, cigarettes weren't nearly as expensive as they are nowadays. If I were still smoking, I'd probably be cutting back somewhere else.

Or buying smuggled cigarettes.

That, apparently, is what a lot of U.S. smokers do.

New York is the highest net importer of smuggled cigarettes, totaling 60.9 percent of the total cigarette market in the state, according to a recent analysis by the Tax Foundation.

The study also notes that the Empire State has the highest state cigarette tax, $4.35 per pack. If you buy your smokes in New York City, add another $1.50 per pack to that price.

That's a lot of numbers, but I'm picking New York's state cigarette tax of $4.35 as this week's By the Numbers feature.

Cigarette taxes across the country: The Campaign for Tobacco-Free Kids says the average of all states' cigarette taxes is $1.48 per pack.

According to the Federation of Tax Administrators, the 10 states with cigarette excise taxes in 2013 of more than $2.00 are:

      1.  New York, $4.35
      2.  Rhode Island, $3.50
      3.  Connecticut, $3.40
      4.  Hawaii, $3.20
      5.  Washington,
$3.025

      6.  New Jersey, $2.70
      7.  Vermont, $2.62
      8.  Wisconsin, $2.52
      9.  Massachusetts, $2.51
    10.  Washington, D.C. $2.50

The 10 states with taxes of less than 60 cents are:

    42.  Idaho, $0.57
    43.  South Carolina, $0.57
    44.  West Virginia, $0.55
    45.  North Carolina, $0.45
    46.  North Dakota, $0.44
    47.  Alabama, $0.425
    48.  Georgia, $0.37
    49.  Louisiana, $0.36
    50.  Virginia, $0.30
    51.  Missouri, $0.17

Smuggling incentive: The Tax Foundation used data that the Mackinac Center for Public Policy, a Michigan think tank, collects every two years. The latest numbers are for 2011 and indicate that smuggling rates
generally rise in states after a large cigarette tax increase is adopted.

That's was the feeling in Illinois last year where the state's cigarette tax went up almost two dollars and law enforcement officials braced for a more active black market for smokes.

In comparing 2011 and 2006 smuggling rates and tax
changes, here are the 10 states with the most cigarette smuggling:

State

Cigarette Tax Rate (2011) Consumption Smuggled (2011) Cigarette Tax Rate Change 2006-2011
New York $4.35 60.9% +190%
Rhode Island $3.46 39.8% +41%
Hawaii $3.20 N/A +129%
Washington $3.025 48.5% +49%
Connecticut $3.00 22.2% +99%
Washington, D.C. $2.86 N/A +186%
New Jersey $2.70 18.1% +13%
Wisconsin $2.52 36.4% +227%
Massachusetts $2.51 18.1% +66%
Vermont $2.24 -16.9% +25%

Vermont seems to be the only outlier here, with smuggling dropping by almost 17 percent in 2011 even though the state's cigarette tax rate increased by 25 percent from 2006 to 2011.

The Tax Foundation report notes, however, that smuggling rates have dropped in some states where neighboring states have higher cigarette tax rates.

Vermont shares two of its borders with Massachusetts and New York, both of which have higher cigarette taxes than the Green Mountain State.

Cigarette boxes photo by skodonnell via iStock

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  • Best 4 Ecigs-electronic cigarette starter kit UK

    Yes, tax on the electronic cigarette has been increased in last few years. It is due to prohibition on bsmoking. It may be helpful to the people to leave the habit of smoking, but if a person is addicted of smoking then it is not possible for him. Electronic cigarette is best alternative in this case.

  • Hahaha, nice one. You got a very catchy headline! Well, I also think that it is because of the high cigarette tax that is why there are lots of cigarettes sprouting of which you don’t know which company manufactured it.

  • I don’t think prohibition of cigarettes would work. But there have got to be ways to go after those who smuggle or sell pirated brands.

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