Cigarette Smuggling Spikes in Illinois

WASHINGTON, D.C. — The rising cost of cigarettes on every level continues to push the rate of cigarette smuggling higher, with Illinois seeing the largest change.

According to the Tax Foundation, increased taxes on tobacco products have created incentives for black-market cigarette trafficking between states. In its latest report, the nonpartisan organization found the biggest rate increase in Illinois, where legislators have looked for new sources of revenue, including increased cigarette taxation.

In 2013, 20.9 percent of all cigarettes consumed in Illinois were smuggled in from other states, compared to 1.1 percent in 2012, the Tax Foundation noted.

The latest report details each state's total inflow or outflow of smuggled cigarettes in 2013. Other key findings include:

• Smuggled cigarettes make up substantial portions of cigarette consumption in many states and greater than 20 percent of consumption in 15 states.
• The highest inbound cigarette smuggling rates are in New York (58 percent), Arizona (49.3 percent), Washington (46.4 percent), New Mexico (46.1 percent) and Rhode Island (32 percent).
• The highest outbound smuggling rates are in New Hampshire (28.6 percent), Idaho (24.2 percent), Virginia (22.6 percent), Delaware (22.6 percent) and Wyoming (21 percent).
• Cigarette tax rates increased in 30 states and the District of Columbia between 2006 and 2013.
• Large differentials in cigarette taxes across states create incentives for black-market sales.

"Public policies often have unintended consequences that outweigh their benefits," said Scott Drenkard, economist and manager of state projects for the Tax Foundation. "High tax rates on cigarettes have led to unreliable revenue and increased criminal activity. Policymakers seeking additional revenue would be better off choosing more stable sources that don't incentivize black-market behavior."