If they never had the money, how can they lose it?
I find it highly instructive that talk of illicit sales of cigarettes talk centers primarily on whether they are properly taxed or not rather than the so-called and heartfelt concern the State as STATE bears for the health of its citizens.
It is all about money. Once and ALWAYS.
Colorado is finding this out with pot. The illegal dealers can undercut the state taxed stuff. Unintended consequences.
The solution will probably be: raise the taxes.
Manny addicts will break the law to feed their addiction.
Well, boo-cuffing-hoo.
Get used to not having the revenue from the sale of cigarettes. Much of the revenue “loss” comes from not smuggled cigarettes, but from various anti-smoking campaigns, and from alternatives like e-cigarettes.
You tax an activity that you don’t want people to do and then complain when they don’t do it.
I bring up this story because it fits into the discussion.
Around fifteen years ago in Germany, the SPD Party won the election and had a partner with the Greens....which meant they had to promise a cabinet post. They gave them the health ministry. About six months into the episode...the health ministry helped to push a two-step significant cigarette tax proposal up. Step one was a massive step on taxes per pack. It passed because of the majority of Greens and SPD pushing it.
A year passes, and the revenue ministry of Germany gets all freaky one day. They are missing around 300 million Euro from the anticipated collection of smokes taxes. It was guaranteed income for the national government and it’s not simple to make-up the income for spending purposes. The health ministry notes that cigarettes consumed went drastically down...so their health agenda is working. Time to go to step two of the agenda.
Well, then the customs patrol guys piped up....they’ve been busing large bulk untaxed cigarettes coming into Germany. Not the little guy with twelve cartoons of smokes...but folks carrying 500 cartoons and selling them to folks on the street or pub-owners. Since the price increase...it made sense for black-market cigarettes. No one is quitting smoking....they simply went to the black-market. The second tax increase? It never went into effect.
Since then, they’ve never recovered. Black-market cigarette smuggling is a regular daily thing and a guy could easily make it as a smuggler.
$300 million?
That’s a LOT of onesies.
Some states, like Alabama, are net exporters of cigarettes. That is, for every 100 cigarettes consumed in Alabama, an additional 7.1 are smuggled out, to the benefit of its treasury. Conversely, 8.5 percent of all the cigarettes consumed in Arkansas are smuggled in; smuggling there represents a loss to its treasury of nearly $18.1 million.
Kinda the same thing some states are saying about guns. States like Alabama are exporting guns to our state so that is why, even with our perfect gun control laws, violent crime is out of control. Chicago for instance.
The “solution”? Federal gun control laws as strict as the states that can’t control their criminals.
You see, if all states had the same high tax on cigarettes then our smuggling problem wouldn’t be so high. But we just can’t get these backwards states to cooperate.
NY is #1 in smuggled cigarettes with 57% of the cigarettes consumed are from outside the state. 500Million pack of cigarettes are smuggled into NY at a loss of tax revenue of $2 billion (which assumes that the same 500 million packs would be purchased in NY anyway which they won’t at those prices)
Anyone who lives within 50 miles of a the borders buys their smokes out of state or on the indian reservations.
In Arizona, NM, and many western states, those smokes aren’t smuggled in, they’re sold legally on indian reservations which are exempt from state tax.