Our friends at the Mackinac Center have released a study on the smuggling of cigarettes due to high cigarette taxes. While politicians often tout raising taxes as a tool to discourage smoking, the study concludes that the increased crime associated with smuggling undermines gains in public health.
This point is demonstrated in an incident last week, where a New York man was arrested for cigarette smuggling. He could face up to 12 years in prison—an expense far outweighing the $9,500 he avoided in state taxes.
Smuggling occurs both in “casual smuggling”—i.e., crossing the border to a nearby state to buy cigarettes for personal use—and “commercial smuggling” by those intent on reselling cigarettes tax free. Pennsylvania has recently been the beneficiary of casual smuggling, as New Yorkers are crossing the border to buy here, after New Yorks dramatic cigarette tax hike. But the study found most New Yorkers are smuggling in cigarettes from low-cost Delaware, not Pennsylvania.
The study estimates on average 5% of the cigarettes consumed in the commonwealth from 1990-2006 were smuggled in from other states.