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Michigan a Cigarette Smuggling Haven
Michigan Capitol Confidential ^ | 1/13/2013 | Michael LaFaive

Posted on 01/15/2013 7:42:09 AM PST by MichCapCon

Supporters of punitively high tobacco tax rates should be careful what they wish for.

According to the Mackinac Center’s latest estimate of cigarette smuggling rates, Michigan is No. 10 nationally in the proportion of cigarettes being smoked here that are illegally smuggled in. This is the third such estimate the Center has produced, and the details are disconcerting. The smuggling rate here increased 12 percent since 2009, with contraband smokes now representing 29.3 percent of all consumption.

The increasing rate of both casual and commercial cigarette smuggling over the past two decades is staggering. Casual smuggling occurs when individuals shop in lower tax jurisdictions for personal consumption. For example, a Kalamazoo smoker can easily make a run for the Indiana border to stock up on much lower-priced smokes. In 2011, such activity represented slightly more than 15 percent of the cigarettes smoked here. Commercial smuggling involves large-scale, long-distance shipments from states like North Carolina or Virginia; it supplied more than 16.2 percent of the cigarettes smoked here in 2011.

At the same time, Michigan also is an out-bound smuggling source. We estimate a quantity equivalent to 3.6 percent of state consumption was smuggled out to Canada, among other things lowering this state’s net-smuggling rate.

Cigarette smuggling is responsible for much more than just state government revenue losses. It is associated with violence, theft, counterfeited and adulterated products and government corruption to name a few.

One example of these unintended consequences involves a police officer in Maryland who actually used his official patrol car, uniform and pistol to escort illicit cigarette shipments to their destination. When smuggling profits are sky high, everyone seems to want a piece of the action and even the “watchers” need to be watched.

The top 10 smuggling import states are, New York (60.9 percent); Arizona (54.4 percent); New Mexico (53 percent); Washington State (48.5 percent); Rhode Island (39.8 percent); Wisconsin (36.4); California (36.1); Texas (33.8); Utah (31.2); and Michigan (29.4).

New York should not be a surprise. It has the highest tobacco excise tax in the nation at $4.35 per pack and New York City imposes another $1.50 on top of that. Cigarettes are undoubtedly being run in from Virginia, among other states. Virginia has the second-lowest tax rate in the nation at .30 cents per pack.

New Hampshire’s proximity to higher-tax states also makes it a significant smuggling source, with outbound smokes equivalent to 27 percent of the state market.

The conclusion from rapidly rising smuggling rates is that politicians’ addiction to higher cigarette tax revenue has created an illegal trade that is hyper-profitable for the wrong people and is generating significant negative consequences for our society.


TOPICS: Business/Economy; Government
KEYWORDS: cigarette; taxes

1 posted on 01/15/2013 7:42:23 AM PST by MichCapCon
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To: Springman; Sioux-san; 70th Division; JPG; PGalt; DuncanWaring; taildragger; epluribus_2; Chuck54; ..
Behold the power of stupid. Raise taxes and create crimes.

If anyone wants to be added to the Michigan Cap Con ping list, let me know.
2 posted on 01/15/2013 7:48:50 AM PST by cripplecreek (REMEMBER THE RIVER RAISIN!)
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To: MichCapCon

Fictional story. Liberals assure us that bans and taxes will automatically ensure 100% compliance and that if we melt all guns down violent crime will cease, just as taxes have stopped smoking.


3 posted on 01/15/2013 7:51:15 AM PST by relictele
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To: MichCapCon

smoking is healthier than fascism.


4 posted on 01/15/2013 7:51:53 AM PST by clio morrel
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To: MichCapCon
S'ok. In about a month, I'll start my tobacco seeds inside, to be ready to go in the ground in early spring. Just like I do every year. I don't pay taxes on what grows in my garden.

/johnny

5 posted on 01/15/2013 7:54:48 AM PST by JRandomFreeper (Gone Galt)
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To: FReepers
Please donate today.
Make it a monthly if you can.



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Support Free Republic

6 posted on 01/15/2013 7:56:10 AM PST by deoetdoctrinae (Gun free zones are playgrounds for felons.)
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To: clio morrel

Yes, your chances of a sudden lead overdose are much less.


7 posted on 01/15/2013 7:56:14 AM PST by Max in Utah (A nation can survive its fools, and even the ambitious. But it cannot survive treason from within.)
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To: MichCapCon
The punch line is these states need more people to smoke.


8 posted on 01/15/2013 7:58:53 AM PST by libertarian27 (Check my profile page for links to the 2011 & 2012 FR Cookbooks- Enjoy)
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To: JRandomFreeper
We used to travel between South Carolina and Pennsylvania regularly when we kin in SC. There is a huge truck stop on the last exit of I-85 on the SC/NC border.

Just about all northbound traffic stops there for two reasons:

  1. Fill the tank. Gas taxes are 10 cents per gallon higher in NC.
  2. Buy cigarettes. Most people are getting a few cartons to take to their friends back north. But there are a few buying caseloads and paying from wads of $100 bills.

Its comical in a way. Everybody knows that those buying caseloads aren't taking them back to friends up north. But even the NC and SC state troopers who use the border truck stop as a regular turnaround (and provide an added degree of safety for all the cash which flows through it) can't help but laugh at the stupidity of liberals who think there is little or no change in commerce no matter how high taxes are raised.

9 posted on 01/15/2013 8:24:13 AM PST by Vigilanteman (Obama: Fake black man. Fake Messiah. Fake American. How many fakes can you fit in one Zer0?)
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To: MichCapCon

If I live in Beloit, Wisconsin, and six miles away in Rockton, Illinois there is a strip mall with cigarettes priced $2 less per pack, and I go there and buy a couple of cartons and bring them back to Beloit for personal use, “smuggler” is not the first word that comes to mind.


10 posted on 01/15/2013 9:12:28 AM PST by Dr. Sivana ("C'est la vie" say the old folks, it goes to show you never can tell. -- Chuck Berry)
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To: MichCapCon

Just across the border in Mexico, cigarettes are still about $2 a pack.


11 posted on 01/15/2013 9:42:43 AM PST by yefragetuwrabrumuy (Best WoT news at rantburg.com)
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To: Vigilanteman

That’s my next profession ,, smuggler! ... and maybe moonshiner..


12 posted on 01/15/2013 2:08:30 PM PST by Neidermeyer
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To: Dr. Sivana
If I live in Beloit, Wisconsin, and six miles away in Rockton, Illinois there is a strip mall with cigarettes priced $2 less per pack, and I go there and buy a couple of cartons and bring them back to Beloit for personal use, "smuggler" is not the first word that comes to mind.

Thrifty come to mind, maybe even smart shopper, but smuggler, no that one doesn't come to mind.

Talk about unintended consequences. (shakes head)

13 posted on 01/15/2013 2:22:53 PM PST by RikaStrom ("To learn who rules over you, simply find out who you are not allowed to criticize." ~Voltaire)
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To: RikaStrom

I think I should have a whole pallet of them, if they are for consumption by me or my baby. In my feeble (and non-legal) mind, the term “smuggling” doesn’t come into play unless I sell some. But I know that is not the legal, operational definition.

(Have a nice Christmas, RikaChicka?)


14 posted on 01/15/2013 2:36:28 PM PST by Cyber Liberty (Obama considers the Third World morally superior to the United States.)
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To: yefragetuwrabrumuy

Mexican cigarettes taste like they’re made with pencil shavings.


15 posted on 01/15/2013 2:42:13 PM PST by Cyber Liberty (Obama considers the Third World morally superior to the United States.)
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To: Cyber Liberty

They are pure pleasure compared to Russian cigarettes, wrapped in newsprint. They taste like steel wool soaked in road asphalt.


16 posted on 01/15/2013 5:24:08 PM PST by yefragetuwrabrumuy (Best WoT news at rantburg.com)
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To: yefragetuwrabrumuy

Ouch. You have a point. And they sell those black and gold grisly things at specialty tobacco shops as rare imports (For large coin). I smoked one once and almost puked all over the place. Gimmee a Marlboro. Sheeeeeit.


17 posted on 01/15/2013 5:34:31 PM PST by Cyber Liberty (Obama considers the Third World morally superior to the United States.)
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To: Cyber Liberty
Recollections from when I smoked:

Most any cigarette from outside the United States will make your head spin at best, very strong. Some are disgusting. I spent a fair amount of time in Ireland at one point and found a brand there that was not just tolerable but enjoyable, though. Silk Cut. For all their history and their artsy, intellectual air, I thought Gauloises were all but unsmokable, you'd be better off inhaling a cheap cigar.

18 posted on 01/15/2013 5:45:33 PM PST by RegulatorCountry
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