Applying excessive taxes to a popular legal product tends to create a black market. This outcome is as predictable as the sunrise, water’s downhill flow, and Adam Schiff (D-CA) being full of what one might find behind a horse. New York, with its nation-leading tobacco taxes, now hosts a thriving black market and significant smuggling activity as a result.
According to a recent report, New York remains a prime location for inbound tobacco smuggling, due to its high tax burden and stringent anti-smoking policies.
The nonpartisan Tax Foundation report placed New York second only to California for illegal tobacco smuggling, noting a revenue loss of over $800 million in 2023. Despite falling from the top spot, 51.8% of the cigarettes consumed in the state are estimated to come from illegal sources.
The report indicates that New York’s and similarly Northeast states’ moves to hike cigarette taxes and ban certain products have transformed smuggling into both a national issue and a lucrative criminal venture.
Smoking is widely recognized as harmful. Even if someone has been isolated for 75 years, they would likely know smoking’s health risks. Personally, as a former smoker who occasionally enjoys a cheroot, I understand. A friend of mine, a heavy smoker and two-time cancer survivor, acknowledges the dangers but chooses to continue his habit. He’s weighed the risks, like many adults do.
When the government imposes sin taxes, it often exacerbates the issue. People will continue to smoke, and the high taxes simply create opportunities for illegal activities to flourish.
“Higher tax rates can incentivize smuggling. As tax rates increase, consumers and suppliers search for ways around these costs,” said Adam Hoffer, the Tax Foundation’s director of excise tax policy. “In cigarette markets, consumers tend to shop across borders where the tax rates are lower, and dealers develop black and gray markets to sell illegally to consumers, paying little or no tax at all.”
Hoffer said growing cigarette tax levels and differentials “have made cigarette smuggling both a national problem and a lucrative criminal enterprise” that is depriving states of more than 4$ 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:
