NYC is the cigarette smuggling capital of the US: study
New York is now the cigarette smuggling capital of the nation.
If you’re lighting up in New York, there’s a good chance that butt was not taxed here. That’s because the “unintended consequences” of high cigarette taxes have made New York City the undisputed butt-smuggling center of the US, according to a new Tax Foundation study.
For 2015, the most recent reporting year, the state lost $1.63 billion because of untaxed sales, according to figures released by analysts for the Tax Foundation.
New York state has a state tax of $4.35 per pack, and the city adds on another $1.50.
Those astronomical cigarette taxes have driven the black market in smokes that cost the city an estimated $740 million in 2015 — and the state about $895 million on top of that — according to the Tax Foundation analysts’ calculations for The Post.
City officials say they are aware of the huge extent of the illegal sales, but defend high cigarette taxes as saving lives.
New York State Department of Taxation and Finance officials declined comment.
Still, the Empire State, the report says, “is the highest net importer of smuggled cigarettes, totaling 56.8 percent of total cigarette consumption in the state.”
The report also said that “smuggling in New York has risen sharply since 2006 (59 percent) as has the tax rate (190 percent).”
The study examined state/city tax receipts, the number of cigarette tax stamps and sales. It matched them against the number of cigarettes smoked from 2010 to 2015.
It concluded that New York has “the worst smuggling problem in America,” said Scott Drenkard, director of state projects with the Tax Foundation. He said it is because “it has the highest cigarette taxes in the nation.”
City officials, including a spokeswoman for the Department of Finance and New York City Sheriff Joe Fucito, didn’t dispute the study. However, they said the city vigorously pursues buttleggers. They defended the high-tax policy, although they concede that New York misses out on lots of tax dollars.
Indeed, in the five-year period in which cigarette taxes were repeatedly raised, New York cigarette tax receipts declined as some quit, and other smokers found a way around high taxes, the report said.
“There’s always the debate over that we have the high tax and all this trafficking,” Fucito said. “But the Department of Health is very clear that the tax deters some people, not everybody, and that it actually saves some lives.”
“Growing cigarette tax differentials have made cigarette smuggling both a national problem and in some cases a lucrative criminal enterprise,” the report said.
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