States’ excise taxes on tobacco, intended to curb tobacco use, are instead causing unintended consequences, such as black-market sales and other extralegal economic activity, according to a new study of consumer behavior.
The report, produced by the Mackinac Center for Public Policy in collaboration with the Tax Foundation, measured state cigarette smuggling as a percentage of total state cigarette consumption, both legal and illegal, in 2013.
In 2013, nearly 58 percent of all cigarettes consumed in New York were extralegal in nature. In Arizona, the second-most popular state for cigarettes purchased elsewhere, contraband cigarettes made up about 49 percent of the overall market.
In the Empire State, and other states, high excise taxes are not reducing tobacco use, as intended. Instead, higher taxes drive consumers to buy cigarettes in other states, or purchase from vendors transporting products from states with lower taxes.
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