Raising Cigarette Taxes : Smugglers Win Over Politician's Greed

Unintended consequences from raising the cigarette tax? Oh please! If the politicians really couldn't understand that this would give the smugglers incentive to step up their collective efforts to take advantages of the raising taxes to stem smoking, just explains how willing the politicians really are do anything to get more revenue or they're just ignorant and stupid.

Unintended Consequences of Cigarette Taxes: Black Markets and Smuggling
Source: Scott Drenkard and Joseph Henchman, "Cigarette Taxes and Cigarette Smuggling by State, 2013," Tax Foundation, February 6, 2015.

February 10, 2015

States across the country tax cigarettes at different rates -- many have raised their cigarette taxes in order to deter people from smoking. But like many government policies, the tax has unintended consequences: it has resulted in high cigarette smuggling rates.

Scott Drenkard and Joseph Henchman of the Tax Foundation highlight the problem. For example:

• A whopping 58 percent of the New York cigarette market consists of smuggled cigarettes. It is no coincidence that its cigarette tax (at $4.35 per pack) is the highest among the 50 states. New York City also imposes a $1.50 per pack tax. Since 2006, the New York tax rate has risen 190 percent, and the smuggling rate has risen 62 percent.
• Similarly, Illinois raised its cigarette tax by $1.00 in 2012. From 2012 to 2013, the smuggling rate in Illinois rose from 1.1 percent to 20.9 percent.

To see if cigarette smuggling is a problem in your state, see the Tax Foundation's smuggling map here. States with the highest smuggling rates are New York, Arizona, Washington, New Mexico and Rhode Island.