The organization says that New York is the highest net importer of smuggled cigarettes, with six out of 10 cigarettes sold in New York smuggled from low-tax states such as Virginia.
Since 2006, the tax rate in New York has risen nearly 200 percent while smuggling has nearly doubled, from 36 percent to 59 percent. Currently, a pack of Marlboros costs US$ 5.07 in Virginia while the same pack costs US$ 14.50 in New York.
Virginia taxes a pack of cigarettes 30 cents compared to New York’s levy of US$ 5.85. A Tax Foundation report says a smuggler who transports a truckload of 800 cases of cigarettes from Virginia to New York could make an estimated US$ 4 million in profits, greater than that of cocaine, heroin, marijuana, or guns.
And while drug trafficking could land a smuggler in prison for life, cigarette trafficking carries a maximum five-year sentence.
With this higher profit potential at a much lower risk, both high- and low-tax states are being robbed of tax revenues due to cigarette smuggling. Total losses on a local, state, and federal level equal nearly US$ 10 billion each year, reports The Economist.
The number of smokers has fallen sharply in the last half century. In 1965 about 42 percent of adults smoked; by 2012, that number was 18 percent, according to the Centers for Disease Control.
