Study finds cigarette smuggling prevalent in states with high tax rates

New Yorkers smoke more smuggled cigarettes than they do those that are legally taxed in the state. It’s also probably no coincidence the state has the nation’s highest cigarette tax rate.

That’s the takeaway from a recent study by the Mackinac Center for Public Policy and the Tax Foundation that found cigarette smuggling is a growing problem, particularly in those states that heavily tax the smokes.

The Empire State imposes a $4.35-per-pack excise tax rate on cigarettes, while smokers in New York City pay an additional $1.50-per-pack tax. And let’s not forget that a federal tax rate of just over $1 per pack is also collected. That means a resident of New York City pays $6.85 in taxes for each pack on top of the actual cost of the smokes.

Even though states in the northeast tend to impose higher cigarette tax rates than the rest of the country — see a map of rates here — New Yorkers can still save quite a bit of money by going across state lines to buy cigarettes. Residents of New York City, for example, could cross the Hudson River into New Jersey and pay a $2.70-per-pack tax rate, saving them more than $4 per pack.

In all, an estimated 55.4 percent of cigarettes consumed in New York in 2014 were smuggled into its borders. New York is followed by Arizona (49.6 percent), New Mexico (46.2 percent), Washington (45.2 percent) and Minnesota (35.5 percent).

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