Place excessive taxes on a popular (and legal, in this case) product, and you’ll create a black market. This is as inevitable as the sun coming up in the east, water flowing downhill, and Adam Schiff (D-CA) being full of the stuff one finds under the south end of a northbound horse. In the latest example of this fundamental law, we have New York, with the highest tobacco taxes in the nation, a booming black market, and a whole lot of smuggling.
New York remains one of the top states for inbound tobacco smuggling, according to a new report, which attributes the robust underground market to the state’s high tax burden and anti-smoking policies.
The nonpartisan Tax Foundation report ranked New York second behind California for inbound illegal tobacco smuggling, with an estimated revenue loss of more than $800,000 million in 2023, the latest year for which data is available. While the Empire State dropped from its No.1 ranking, the report estimates that 51.8 % of the cigarettes consumed in the state still come from the illegal market.
The report’s authors said the move by New York and other Northeast states to raise cigarette taxes and ban certain tobacco products has made cigarette smuggling both a national problem and a lucrative criminal enterprise.
Smoking is bad. We get it. Everyone knows it. Unless you’ve lived under a flat rock in the Canadian Arctic for the last 75 years, you know smoking is bad for your health. I’m a former cigarette smoker myself (Camels) and still enjoy a good Parodi cheroot now and then, maybe two or three a month. A friend of mine is a heavy smoker, as well as a two-time cancer survivor. He knows the risks – I think he’s being reckless in continuing his pack-a-day habit after two bouts of cancer, but that’s his choice, he’s an adult, he’s capable of analyzing the risks and choosing to accept them. Like you know, most adults do.
But when the heavy hand of government steps in with sin taxes, they generally just end up making matters worse. People are still going to smoke, and high taxes just open up opportunities for criminal enterprise.
“Higher tax rates can incentivize smuggling. As tax rates increase, consumers and suppliers search for ways around these costs,” said Adam Hoffer, the Tax Foundation’s director of excise tax policy. “In cigarette markets, consumers tend to shop across borders where the tax rates are lower, and dealers develop black and gray markets to sell illegally to consumers, paying little or no tax at all.”
Hoffer said growing cigarette tax levels and differentials “have made cigarette smuggling both a national problem and a lucrative criminal enterprise” that is depriving states of more than 4$ billion in tax revenue in 2023.
This is known as belaboring the obvious. The now thankfully defunct Biden administration may have been even dumber than the State of New York on this issue:
Read More: Biden FDA Handing Cartels, Smugglers Huge New Year’s Gift by Banning Cigarettes
Biden Administration Drops Planned Ban on Menthol Cigarettes Over Fear of Angering Minority Voters
New York is notorious for trying to alter people’s behavior with taxation. The city does it too – remember Michael Bloomberg’s “soda tax?” And what you tax, normally, you get less of – unless you’re taxing tobacco, which it seems people are going to get, one way or another. Now, with New York’s tobacco taxes scraping the roof, people are getting their smokes from smugglers. That’s not a good thing, but it’s a safe bet Albany won’t engage in any assessment of just how this taxation is working out. They’ve already signaled that virtue.
This seems appropriate.
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