New York State Leads Country in Smuggled Cigarettes

WASHINGTON, D.C. -- A new report by the Tax Foundation found that New York State ranks first for smuggled cigarettes in the United States. Considering the state has the highest cigarette excise tax -- at $4.35 per pack -- that news is not surprising.

According to the Washington, D.C.-based Tax Foundation, New York is the highest net importer of smuggled cigarettes, totaling 60.9 percent of the total cigarette market in the state. The Empire State also has the highest state cigarette tax, not counting the local New York City cigarette tax, which is an additional $1.50 per pack. Smuggling in New York has risen sharply since 2006 (+170 percent), as has the tax rate (+190 percent).

Smuggling includes counterfeit state tax stamps, counterfeit versions of legitimate brands, hijacked trucks, or officials turning a blind eye, the organization added.

"Public policies often have unintended consequences that outweigh their benefits," said Tax Foundation economist Scott Drenkard. "Dramatic increases in state cigarette taxes have yielded additional revenue for priorities like public health, but have also fueled the rise of organized crime and law enforcement corruption."

Arizona, New Mexico, Washington State and Rhode Island follow New York to round out the top five states with the highest rates of smuggled cigarettes. Arizona comes in at 54.4 percent, New Mexico at 53 percent, Washington State at 48.5 percent and Rhode Island at 39.8 percent.

The Tax Foundation uses data on illegal cigarette sales from the Mackinac Center for Public Policy, a Michigan think tank, which uses a statistical analysis of available data to estimate smuggling rates for each state. Their most recent report uses 2011 data and finds that smuggling rates generally increase in states after they adopt large cigarette tax increases.