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Tobacco Tax:
Study on Cigarette Smuggling Shows Connection to High Tax Rates

A new report from the Mackinac Center for Public Policy finds that the higher the tax on cigarettes in a state, the increased likelihood that the rate of cigarette smuggling will be high.

This finding, included in the center's biennial statistical analysis on state cigarette smuggling, reflects the same trend that previous reports have shown.

States that saw a decrease in smuggling, according to the study, were typically those neighboring states with higher cigarette taxes.

New York topped the "buttlegging" list, with 69.9 percent of its cigarette consumption coming from smuggling. New York has the nation's highest cigarette tax, at $4.35 a pack and an additional $1.50 per pack for those who live in New York City. Since 2006, New York's cigarette tax has risen more than 190 percent, and smuggling has risen more than 170 percent.

California ranked seventh in percentage of consumption resulting from smuggling, with 36.1 percent of the state's cigarette market comprised of smuggled products. This number has gone slightly down since 2006. The study stated that California's smuggling rate has not increased because California has not raised its cigarette tax over the course of the five years that the study examined. (Source: "Cigarette Taxes and Smuggling," the Mackinac Center on Public Policy, December 2.)

January 11,, 2013
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