If you smoke cigarettes in New York, odds are they weren’t taxed by the state or city.
A new report published by the Tax Foundation, a Washington, D.C.–based think tank, shows that a majority of the cigarettes consumed in New York State are smuggled illegally. Their findings are pulled from annual data provided by the Mackinac Center for Public Policy, which uses statistical analysis to estimate cigarette smuggling rates in each state. In 2014, the report says, an estimated 55.4 percent of the cigarettes consumed in the Empire State were trafficked illegally, far and away the highest rate in the entire country.
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Yes, you’re reading that right: more than half of the cigarettes that are smoked in New York are smuggled from jurisdictions with substantially lower taxes on tobacco. The high rate of illicit smokes in the state climbed drastically since 2006, when 35.8 percent of the cigarettes were smuggled, according to the report.
The Tax Foundation chalks this rise up to public policies that have “unintended consequences that outweigh their benefits.”
The public policies they’re referencing include the recent spike in cigarette taxes in the state and city. New York has the highest state cigarette tax in the country at $4.35 per pack, and packs sold in New York City come with an additional tax of $1.50. On top of that, Mayor Bill de Blasio recently increased the minimum retail price for a pack of smokes in Gotham to $13, also the highest in the country.
The correlation between the rise in the cost of cigarettes and a spike in tobacco smuggling is no coincidence, the report says: “Excessive tax rates on cigarettes approach de facto prohibition in some states, inducing black and gray market movement of tobacco products into high tax states from low tax states or foreign sources.”
The Tax Foundation also references another recent study from Tobacco Control, which examined the tax stamps on littered cigarette packs in five northeastern cities (New York, Boston, Philadelphia, Washington, D.C. and Providence). It found that 58.7 percent of the packs did not have a proper local stamp, up to 42.1 percent of which could be attributed to illegal trafficking. Overall, the study estimated that the five cities studied were losing up to a combined $729 million in annual local taxes.
The report should come as no surprise to anyone who has purchased a discounted pack of smokes from their local bodega and found an out-of-state tax stamp on the bottom. At a press conference last August, New York City Sheriff Joseph Fucito vowed to crack down on this kind of illicit activity.
“We stand ready to enforce the law to deter criminal traffickers,” he said. “Our strategy includes regulatory inspection, criminal investigation, audit and civil forfeiture.”