Tags: New york City | Cigarette Taxes

Smugglers Benefit From NY's High Cigarette Taxes

By Thursday, 04 December 2014 01:18 PM Current | Bio | Archive

Cigarettes are a major profit item for government, which is why the NYPD created a task force to crack down on those circumventing cigarette taxes.

According to the New York Post, a recent Tax Foundation study found that almost 57 percent of cigarettes smoked in New York City were brought into the state illegally.

A legal pack of 20 cigarettes in New York City means that the smoker has paid for a $1.50 per pack tax to the city plus $4.35 New York state taxes plus $1.01 in Federal tobacco tax  — a Federal tax increase from 62 cents per pack signed into law by smoker President Barack Obama.

These cigarette taxes add $6.86 to the cost of a pack in New York City — more than 34 cents per cigarette.

Progressives claim that high taxes deter people from smoking.

This Progressive reasoning at first seems reasonable. If you tax something, you get less of it — and if you subsidize something, you get more of it. Oddly, however, those on the left do not apply this same logic to their high taxes on business that reduce hiring and prosperity . . . or to liberal welfare payments that subsidize sloth.

Progressives claim to care for the poor, yet the 18.1 percent of Americans who still smoke are disproportionately poor.

A 2012 study for the New York State Department of Health found that smokers in households making less than $30,000 a year spent on average 23.6 percent — nearly 1 dollar in 4 — of household income on cigarettes.

New York's cigarette taxes are regressive, hurting poor people most. This crushing burden on the poor has risen along with cigarette taxes and the various other taxes, including sales taxes, on high-cost cigarettes.

If cigarettes can be fatally hazardous to health  — as much scientific research indicates — then progressive politicians should outlaw cigarettes and send illegal smokers to rehab.

Progressives do not outlaw smoking, however, because since 1998 governments at all levels have collected more than $528.5 Billion in cigarette taxes and other cigarette-related revenues and penalties.

In 2013, cigarette taxes plus related settlement payments put $43.9 Billion in government coffers. R.J. Reynolds estimates that government per-pack profit from its cigarettes in 2013 was "more than six times" greater than its own profit.

This, of course, is an estimate averaged across the country. In Virginia, e.g., the state tax on a pack of cigarettes is 30 cents. The lowest is Missouri, at 17 cents a pack.

A pack of cigarettes smuggled into New York City from Virginia, therefore, costs approximately $5.55 — nearly 28 cents per cigarette — less in taxes than a legal pack.

To offset this huge tax-caused incentive, New York City threatens smugglers of smokes with a fine of $600 per illegal pack . . . and targets those selling individual cigarettes of uncertain origin for 75 cents to one dollar for arrest and prison.

New York's Progressive government thus asserts its tax monopoly over a product it believes kills many smokers. But spendaholic politicians are hooked on cigarette tax revenues. Either abolish these crime-tempting stratospheric taxes or outlaw cigarettes.

And speaking of chokeholds, President Obama, please end your "Operation Choke Point," discussed in my latest book "Don't Bank On It!", which coerces banks into cutting off accounts of law-abiding businesses like gun stores that you ideologically dislike. This is one more example of high-handed government and hypocrisy.

Lowell Ponte is co-author, with Craig R. Smith, of "The Great Withdrawal"; "Crashing the Dollar: How to Survive a Global Currency Collapse"; "The Great Debasement: The 100-Year Dying of the Dollar and How to Get America's Money Back"; "The Inflation Deception: Six Ways Government Tricks Us . . . And Seven Ways to Stop It"; and "Re-Making Money: Ways to Restore America's Optimistic Golden Age." Read more reports from Lowell Ponte — Click Here Now.


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New York's Progressive government thus asserts its tax monopoly over a product it believes kills many smokers. But spendaholic politicians are hooked on cigarette tax revenues.
New york City, Cigarette Taxes
Thursday, 04 December 2014 01:18 PM
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