More than half of all cigarettes sold in New York are smuggled into the state illegally

  • Almost 57 per cent of all cigarettes sold in New York are smuggled in from out of state, according to a new report from the Tax Foundation
  • The report's authors attribute the illegal sales to New York having the nation's highest cigarette taxes

By Ryan Gorman

PUBLISHED: 16:14 EST, 22 March 2014 | UPDATED: 16:15 EST, 22 March 2014

New York’s sky-high cigarette taxes have led to more than half of all packs sold in the state being smuggled in illegally, a new report has revealed.

The 56.9 per cent of packs sold illegally in New York are the highest percentage in the country, according to the Tax Foundation, and are likely a direct result of the state having the highest cigarette taxes.

The Empire State levies a $4.35 cent per pack tax on smokers jonesing for their fix. Packs bought in the Big Apple also face an additional city tax of $1.50 – bringing the total cost per pack to as high as $15 within the five boroughs.

On display: Cigarettes behind the counter of Duane Reade, a ubiquitous store in New York City, but many more are sold in the city's thousands of bodegas

On display: Cigarettes behind the counter of Duane Reade, a ubiquitous store in New York City, but many more are sold in the city's thousands of bodegas

New York’s high taxes are not alone in causing high rates of illegal smuggling across state lines.

Arizona’s 51.5 per cent of packs sold illegally place it second in the nation, New Mexico and Washington come in at 48 per cent each, and Wisconsin rounds out the top five at just under 35 per cent, according to the Tax Foundation.

Arizona’s $2 per pack tax ranks twelfth in the country and is one of the highest in that part of the country, according to Fox News.

 

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‘Public policies often have unintended consequences that outweigh their benefits,’ study author John Henchman wrote, according to Fox News.

‘One consequence of high state cigarette tax rates has been increased smuggling as criminals procure discounted packs from low-tax states to sell in high-tax states,’ he continued.

Nowhere is that practice more prevalent than in Manhattan, where people walking through Chinatown and Midtown come across people hawking cigarettes almost as often as they try to sell counterfeit bags and sunglasses.

Lost revenue: Shelves full of cigarettes at a store in Manhattan - half of all cigarettes sold in New York are brought across state lines illegally

Lost revenue: Shelves full of cigarettes at a store in Manhattan - half of all cigarettes sold in New York are brought across state lines illegally

This anecdotal evidence is backed up by another study cited by the Tax Foundation which found that almost 60 per cent of all packed tossed in the trash come from outside the five major northeast cities surveyed.

The states with the highest rates of outbound smuggling – New Hampshire (24.2 per cent), Wyoming (22.3 per cent), Idaho (21.3 per cent), Virginia (21.2 per cent) and Delaware (20.9 per cent), according to the study – coincidentally ranked among the lowest in per pack taxes in the nation.

Smugglers try to hide their illicit activities with counterfeit state tax stamps, by hijacking trucks and selling knock-off cigarettes, according to the report. In some instances, officials even turn a blind eye to the sales.

As much as $5billion a year in revenue is lost each year to illegal cigarette sales, according to U.S. Department of Justice Bureau of Alcohol, Tobacco, Firearms, and Explosives statistics cited by Fox News.

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Great article, less tax revenue for the Politicians to give away to the illegals. I live near a border state that has no sales tax on goods. Guess where I'm shopping on the weekends!!

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Funny the states want to ban smoking every

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Dang....and here I was thinking smuggling and mailing cigs from IRAQ was profitable. Ididnt even have to leave the country.

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It's the modern equivalent of the Boston Tea Party. Usurious TAXATION will ALWAYS be resisted.

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Hard to feel sorry for smokers after watching my dad live the last six months of his life on a ventilator due to smoking. He quit smoking when we found out how bad smoking was for our lungs, but by then the damage had been done.

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typical of pols, they wrong their hands that smoking is so terrible, but do they ban it? no, they're making too much money on them; you can buy a pack via reservation for about $2, and they're making a profit, so nyc is taking 10- plus per pack, but they are wring their hands when they pocket the bucks

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The law of diminishing returns as exhibited by obscene taxes.

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There are several Indian reservations in New York State. By treaty they are considered sovereign nations and not subject to collect state or federal taxes for any items sold on the reservations. When the cigarette tax jumped up, of course smokers began going to the rez for $8 cartons of cigs rather than spend $80 on a carton. NYS decided to file a lawsuit demanding the rez collect the state taxes, as they weren't getting the expected revenue. Though it was a treaty violation, after several expensive yrs in court, the state won. However, the Indians got the concession that cigarettes produced in rez factories were Indian products and therefore exempt, so they stopped ordering name brands and now exclusively sell their own brands. Now not just lost tax revenue, but lost sales revenue for the major producers. Short-sighted pols couldn't see this coming as they wasted all the taxes they'd gained on the lawsuit?

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And once again, the Native Americans/First Nation People loose out at the hands of the "white man" via the court system. They had the ability to make a little extra money, as many reservations are on arid and non-producing land. Yes, some can turn a profit from casinos, but I'm not sure how this works in NY. How utterly despicable there could not be a more fair solution in favor of the Indians.

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When I lived in NYC I bought cartons from the Indian reservations and had them mailed to me. Then they passed a law banning the shipment of tobacco in the mail, and that little loophole was closed.

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Stop smoking!!! 🚬🚫

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