High Tobacco Taxes Spark Huge Black Market in Northeast

Breitbart ^ | 6 Jan 2014 | Mike Flynn

[Hoodat]

High-cigarette tax jurisdictions are losing out on up to $729 million in tax revenue each year due to illicit trade in tobacco products.

That is according to a new study from the nonprofit research organization RTI International. The figure represents an upper-end estimate of aggregate revenue foregone by the cities of Boston, Philadelphia, New York, Providence and Washington, DC. All five are top destinations for cigarette smugglers seeking to take advantage of high cigarette tax rates that push economy-minded buyers, including underage smokers seeking to avoid high, legal prices, to the black market.

In New York, which boasts the highest cigarette tax in the nation, the market in illicit cigarettes is vast.

According to a 2013 study by the Tax Foundation, about 60 percent of cigarettes sold in New York are smuggled.

A previous 2011 study conducted by the lead researcher in the RTI study indicated that in New York City, specifically, up to 42 percent of cigarettes were smuggled into the city from lower tax jurisdictions.

Most cigarettes sold on the black market in New York appear to originate from lower-tax Virginia.

Late last year, New York City established by law a minimum price of $10.50 per pack, which some observers believe could further fuel the illicit trade problem. At the time of the study the average price per pack in New York City was about $8.

While some policy experts . . .

[Hoodat]

Gee, you mean to tell me that people will actually change their behavior when market forces shift? Go figure.

Meanwhile, liberals continue to believe that setting at tax rate at 100% will bring in the most revenue.

[JoeDetweiler]

Sheesh....why can’t I ever find these black market cigarettes? I’d buy ‘em in a minute :-)

[JRandomFreeper]

Untaxed tobacco is easy to grow. This one isn't actually supposed to be growing, it's the wrong time of year, but a seed wound up in my fall potting soil mix, and I let it live.

.50 BMG shown for scale.

/johnny

[sickoflibs]

I remember in the mid 2000s buying two Beatles CDs from a street vendor at a great price and when I opened them there was no stamped decorative label on the actual CD, just a stamped #.

The insert paper foldout pictures were not prenent
The CDs worked fine

I think Michael Jackson didn’t get his cut of that sale.

[Theodore R.]

Odd, considering that New Englanders love big government, paying taxes, and socialist programs.

[tomkat]

Ahhh, a bit of good news on a weekday morning !

More power to 'em !

[Tea Party Terrorist]

People who buy black market cigs just hate children’s health programs, which tobacco taxes fund ;-)

[MrB]

The free and noncoerced exchange of goods and services, ie, the free market, is the default condition, like gravity.

The left can try to impose their version of Utopia but it’s like trying to overcome gravity. Eventually, it falls down to the default state.

[PapaBear3625]

Sheesh....why can’t I ever find these black market cigarettes? I’d buy ‘em in a minute :-)

"Black market cigs": Having a buddy/relative living in Virginia, who brings a few cases of cigs every time he visits.

[Mr. K]

I dont know how it propagates, but you should encorage that!

[tomkat]

.. which tobacco taxes fund

   

dang, that's a good'n !

[VerySadAmerican]

So, how long before the number of packs a person can buy ANYWHERE in the country is limited? It’s amazing that Bloomberg didn’t try to pass a law prohibiting Virginia from selling cigarettes at a lower price than New York. It wouldn’t have forced Virginia to do it but it would have made Bloomberg feel good.

[JRandomFreeper]

I'll be planting 200 for the spring. This one just showed up, and I've let it live, mainly for grins.

/johnny

[Vigilanteman]

We have a sister plant in North Carolina. Every time someone from our plant makes a business trip down there or one of them comes here, there is a standing order for several cartons from the smokers here.

I don't smoke myself, but I'm getting so sick of this nanny government, I'm honestly thinking of turning this into a side business. Cartons of cigs are very easy to transport and the difference in tax rates are getting too big to ignore.

[Buckeye McFrog]

This is not unlike Canadians I have known who would brag about their more compassionate government, but then slam malls in Michigan every weekend and smuggle home five layers of new clothing to evade the GST.

[Sir Napsalot]

Never mind that, don’t you know it is all the evil and heartless Republicans’ fault?

Shorter - Buuuuuuush!

[umgud]

One day I had too much time on my hands and calculated how many packs of cigarettes would fit in a large semi-van. Don’t remember the specific numbers, but do remember the cost to be at least a few $million.

[kabar]

When I lived in Italy almost 50 years ago, the tax on cigarettes was very high. A huge blackmarket developed including ships offshore being used as depots for illegal cigarettes and smugglers bringing in the illicit cargo by small boats.

It is similar to Prohibition and the ways people got around the ban on alcohol. Cigarettes will find their way into NY from places like VA, which has comparatively low taxes on cigarettes. A carton costs about $45.

[Hoodat]

Currently, the Commonwealth of Virginia is experiencing a windfall from increased (e.g. out-of-state) cigarette sales. Greedy Democrats who now run Virginia will increase the cigarette tax, thus putting an end to these increase sales.

Result of new Virginia tax increase: reduced revenues.

[virgil]

The day will come that growing your own tobacco will be illegal. In keeping with the typical quality of legislation we get, buried in the law will be a provision to make it illegal to grow your own fruit and vegetables.