Hot Air is reporting today that the Midland, Mich.-based Mackinac Center has released a report stating that in 2011 New York had the highest cigarette smuggling rate in America. In 2006, when the cigarette tax was $1.50 a pack, New York was the fifth highest. In 2008, the tax went to $2.75 a pack, in 2010 it went to $4.35 a pack. That increase was enough to move New York from fifth place to first place in the number of cigarettes smuggled into the state. It is now estimated that 60.9 percent of all cigarettes smoked in New York are not taxed there!
What can we learn from this? Simple. People don’t like to pay taxes and will do almost anything to avoid them. Some state is making money on the sale of these cigarettes–it’s just not New York. New Hampshire seems to be where most of the smuggled cigarettes are coming from–New Hampshire does tax cigarettes, but only $1.68 a pack. I suspect New Hampshire collects more revenue from its lower tax than New York does from its higher tax. Maybe we could learn from that.