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High Tobacco Taxes Spark Huge Black Market in Northeast
Breitbart ^ | 6 Jan 2014 | Mike Flynn

Posted on 01/07/2014 6:18:03 AM PST by Hoodat

High-cigarette tax jurisdictions are losing out on up to $729 million in tax revenue each year due to illicit trade in tobacco products.

That is according to a new study from the nonprofit research organization RTI International. The figure represents an upper-end estimate of aggregate revenue foregone by the cities of Boston, Philadelphia, New York, Providence and Washington, DC. All five are top destinations for cigarette smugglers seeking to take advantage of high cigarette tax rates that push economy-minded buyers, including underage smokers seeking to avoid high, legal prices, to the black market.

In New York, which boasts the highest cigarette tax in the nation, the market in illicit cigarettes is vast.

According to a 2013 study by the Tax Foundation, about 60 percent of cigarettes sold in New York are smuggled.

A previous 2011 study conducted by the lead researcher in the RTI study indicated that in New York City, specifically, up to 42 percent of cigarettes were smuggled into the city from lower tax jurisdictions.

Most cigarettes sold on the black market in New York appear to originate from lower-tax Virginia.

Late last year, New York City established by law a minimum price of $10.50 per pack, which some observers believe could further fuel the illicit trade problem. At the time of the study the average price per pack in New York City was about $8.

While some policy experts . . .

(Excerpt) Read more at breitbart.com ...


TOPICS: Business/Economy; Culture/Society; Extended News; News/Current Events; US: New York; US: Virginia
KEYWORDS: cigarettes; invisiblehand; taxes; tobacco; tobaccotax
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Gee, you mean to tell me that people will actually change their behavior when market forces shift? Go figure.

Meanwhile, liberals continue to believe that setting at tax rate at 100% will bring in the most revenue.

1 posted on 01/07/2014 6:18:03 AM PST by Hoodat
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To: Hoodat

Sheesh....why can’t I ever find these black market cigarettes? I’d buy ‘em in a minute :-)


2 posted on 01/07/2014 6:21:01 AM PST by JoeDetweiler
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To: Hoodat

Untaxed tobacco is easy to grow. This one isn't actually supposed to be growing, it's the wrong time of year, but a seed wound up in my fall potting soil mix, and I let it live.

.50 BMG shown for scale.

/johnny

3 posted on 01/07/2014 6:21:23 AM PST by JRandomFreeper (Gone Galt)
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To: Hoodat

I remember in the mid 2000s buying two Beatles CDs from a street vendor at a great price and when I opened them there was no stamped decorative label on the actual CD, just a stamped #.

The insert paper foldout pictures were not prenent
The CDs worked fine

I think Michael Jackson didn’t get his cut of that sale.


4 posted on 01/07/2014 6:24:04 AM PST by sickoflibs (Obama : 'If you like your Doctor you can keep him, PERIOD! Don't believe the GOPs warnings')
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To: Hoodat

Odd, considering that New Englanders love big government, paying taxes, and socialist programs.


5 posted on 01/07/2014 6:24:16 AM PST by Theodore R. (People in TX in 2014: Cornball and George P.!)
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To: Hoodat
Ahhh, a bit of good news on a weekday morning !

More power to 'em !

6 posted on 01/07/2014 6:25:09 AM PST by tomkat (unreconstructable)
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To: Hoodat

People who buy black market cigs just hate children’s health programs, which tobacco taxes fund ;-)


7 posted on 01/07/2014 6:25:40 AM PST by Tea Party Terrorist (Why work for a living when you can vote for a living?)
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To: Hoodat

The free and noncoerced exchange of goods and services, ie, the free market, is the default condition, like gravity.

The left can try to impose their version of Utopia but it’s like trying to overcome gravity. Eventually, it falls down to the default state.


8 posted on 01/07/2014 6:26:08 AM PST by MrB (The difference between a Humanist and a Satanist - the latter admits whom he's working for)
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To: JoeDetweiler
Sheesh....why can’t I ever find these black market cigarettes? I’d buy ‘em in a minute :-)

"Black market cigs": Having a buddy/relative living in Virginia, who brings a few cases of cigs every time he visits.

9 posted on 01/07/2014 6:27:59 AM PST by PapaBear3625 (You don't notice it's a police state until the police come for you.)
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To: JRandomFreeper

I dont know how it propagates, but you should encorage that!


10 posted on 01/07/2014 6:28:05 AM PST by Mr. K (If you like your constitution, you can keep it...Period.)
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To: Tea Party Terrorist
.. which tobacco taxes fund

   

dang, that's a good'n !

11 posted on 01/07/2014 6:28:49 AM PST by tomkat (unreconstructable)
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To: Hoodat

So, how long before the number of packs a person can buy ANYWHERE in the country is limited? It’s amazing that Bloomberg didn’t try to pass a law prohibiting Virginia from selling cigarettes at a lower price than New York. It wouldn’t have forced Virginia to do it but it would have made Bloomberg feel good.


12 posted on 01/07/2014 6:29:23 AM PST by VerySadAmerican (".....Barrack, and the horse Mohammed rode in on.")
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To: Mr. K
I'll be planting 200 for the spring. This one just showed up, and I've let it live, mainly for grins.

/johnny

13 posted on 01/07/2014 6:31:47 AM PST by JRandomFreeper (Gone Galt)
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To: JoeDetweiler
We have a sister plant in North Carolina. Every time someone from our plant makes a business trip down there or one of them comes here, there is a standing order for several cartons from the smokers here.

I don't smoke myself, but I'm getting so sick of this nanny government, I'm honestly thinking of turning this into a side business. Cartons of cigs are very easy to transport and the difference in tax rates are getting too big to ignore.

14 posted on 01/07/2014 6:32:20 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: Theodore R.

This is not unlike Canadians I have known who would brag about their more compassionate government, but then slam malls in Michigan every weekend and smuggle home five layers of new clothing to evade the GST.


15 posted on 01/07/2014 6:32:58 AM PST by Buckeye McFrog
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To: Theodore R.

Never mind that, don’t you know it is all the evil and heartless Republicans’ fault?

Shorter - Buuuuuuush!


16 posted on 01/07/2014 6:34:58 AM PST by Sir Napsalot (Pravda + Useful Idiots = CCCP; JournOList + Useful Idiots = DopeyChangey!)
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To: Hoodat

One day I had too much time on my hands and calculated how many packs of cigarettes would fit in a large semi-van. Don’t remember the specific numbers, but do remember the cost to be at least a few $million.


17 posted on 01/07/2014 6:35:09 AM PST by umgud (2A can't survive dem majorities)
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To: Hoodat
When I lived in Italy almost 50 years ago, the tax on cigarettes was very high. A huge blackmarket developed including ships offshore being used as depots for illegal cigarettes and smugglers bringing in the illicit cargo by small boats.

It is similar to Prohibition and the ways people got around the ban on alcohol. Cigarettes will find their way into NY from places like VA, which has comparatively low taxes on cigarettes. A carton costs about $45.

18 posted on 01/07/2014 6:45:32 AM PST by kabar
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To: VerySadAmerican
Currently, the Commonwealth of Virginia is experiencing a windfall from increased (e.g. out-of-state) cigarette sales. Greedy Democrats who now run Virginia will increase the cigarette tax, thus putting an end to these increase sales.

Result of new Virginia tax increase: reduced revenues.

19 posted on 01/07/2014 6:47:49 AM PST by Hoodat (Democrats - Opposing Equal Protection since 1828)
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To: JRandomFreeper

The day will come that growing your own tobacco will be illegal. In keeping with the typical quality of legislation we get, buried in the law will be a provision to make it illegal to grow your own fruit and vegetables.


20 posted on 01/07/2014 6:48:17 AM PST by virgil
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To: kabar

Now you see why I am opposed to a national sales tax. Instead of the IRS, we will have the Bureau of Alcohol, Tobacco, Firearms, and Everything Else Sold Under the Sun.


21 posted on 01/07/2014 6:49:16 AM PST by Hoodat (Democrats - Opposing Equal Protection since 1828)
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To: virgil
Then I shall be an outlaw. I won't live on my knees.

/johnny

22 posted on 01/07/2014 6:49:39 AM PST by JRandomFreeper (Gone Galt)
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To: JRandomFreeper

How much water do they need?


23 posted on 01/07/2014 6:52:44 AM PST by MileHi ( "It's coming down to patriots vs the politicians." - ovrtaxt)
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To: Hoodat

“...tax jurisdictions are losing out on up to $729 million in tax revenue...”

I love the phrasing. “Losing out on tax revenue”. It wasn’t theirs to lose.


24 posted on 01/07/2014 6:53:37 AM PST by Personal Responsibility (I'd use the /S tag but is it really necessary?)
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To: MileHi
Like anything else in the garden. If you can grow tomatoes, you can grow tobacco.

/johnny

25 posted on 01/07/2014 6:55:30 AM PST by JRandomFreeper (Gone Galt)
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To: Personal Responsibility
The government thinks everything is theirs, that's why they consider it losing $729 M.

/johnny

26 posted on 01/07/2014 6:56:52 AM PST by JRandomFreeper (Gone Galt)
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To: JRandomFreeper

I need to try this.


27 posted on 01/07/2014 6:57:09 AM PST by MileHi ( "It's coming down to patriots vs the politicians." - ovrtaxt)
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To: Hoodat

MA people go to N.H. (or have someone pick them up).

The difference is about $20.00 a carton.

For a pack a day smoker that’s about $700.00 a year.

,


28 posted on 01/07/2014 6:58:55 AM PST by Mears
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To: Hoodat
In New York, which boasts the highest cigarette tax in the nation, the market in illicit cigarettes is vast.

Good! I support the criminals on this one. May they be vastly successful and profitable. All governments, local, state and federal, have lost most of their legitimacy in telling Americans how they will behave, what they can own, and what they will pay for goods. It seems to me that governments and law enforcement today, are no longer treating the citizens with the deserved respect that a law abiding citizen has earned, and consequently requires of its government.

The federal government especially, has forfeited its legitimate purposes and can go to hell. The growing number of people that feel this way, will no longer blindly follow the laws passed by that cesspool administration in D.C. and its lackey criminal enterprise called democrats in congress.

Lying to, cheating, and stealing from, the federal government is now the order of the day.
29 posted on 01/07/2014 6:59:46 AM PST by ZX12R (Never forget the heroes of Benghazi, who were abandoned to their deaths by Obama)
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To: JRandomFreeper

I have seen what looks to me like tobacco plants in Amish home gardens in Lancaster, PA.


30 posted on 01/07/2014 7:24:10 AM PST by sportutegrl
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To: ZX12R
Good! I support the criminals on this one.

The only criminals here are the politicians who not only allow the sale of a dangerous and highly addictive product, but they reap the greatest profit from its sale - several times that of the companies who actually make it.

The government bleeds the smoker dry all the while hoping that the smoker dies on his/her 65th birthday.

31 posted on 01/07/2014 7:25:33 AM PST by Hoodat (Democrats - Opposing Equal Protection since 1828)
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To: sportutegrl
It can be grown almost anywhere.

/johnny

32 posted on 01/07/2014 7:34:30 AM PST by JRandomFreeper (Gone Galt)
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To: Vigilanteman

I crunched the numbers once a few years ago and figured that a MI tobacco smuggler could drive to a N Kentucky Indian Rez once a week in a small car and make over $1200 a week after expenses. Round trip in less than 8 hrs.

And that was still selling them for half the going price.

I’ll bet someone in NY could make $5,000 a week today.


33 posted on 01/07/2014 7:35:54 AM PST by Beagle8U (Unions are Affirmative Action for Slackers! .)
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To: Beagle8U

Back in the 60s I worked at an auto plant in NE Ohio. There were always guys selling trunkfulls of low tax Ky cigs, and the savings was probably 5 cents a pack, LOL.


34 posted on 01/07/2014 7:45:59 AM PST by nascarnation (I'm hiring Jack Palladino to investigate Baraq's golf scores.)
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To: JRandomFreeper

Yes it can. I’ve seen fields of it in southern Pennsylvania. It is just that the soil and climate conditions between Virginia and South Carolina (extending into eastern Kentucky and Tennessee) are particularly well suited for the most efficient growth.


35 posted on 01/07/2014 7:48:04 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: Hoodat
The only criminals here are the politicians who not only allow the sale of a dangerous and highly addictive product

The fact that you or the government has an opinion about smoking, should have no bearing on the price or availability of tobacco. You should learn to mind your own business and let the market decide.

Or just move to Cuba or Russia where you'd fit right in among your own kind.
36 posted on 01/07/2014 7:49:19 AM PST by ZX12R (Never forget the heroes of Benghazi, who were abandoned to their deaths by Obama)
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To: Vigilanteman
I do ok with it here in Texas.

/johnny

37 posted on 01/07/2014 7:51:01 AM PST by JRandomFreeper (Gone Galt)
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To: PapaBear3625

Visit your local Indian reservation. Nudge, nudge, wink, wink - you know what I mean?


38 posted on 01/07/2014 7:51:10 AM PST by Noumenon (Resistance. Restoration. Retribution.)
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To: Beagle8U

http://money.cnn.com/2013/04/16/news/economy/cigarette-smuggling/
The lucrative business of cigarette smuggling
Wanna make a quick $1,944,000? Buy a truckload of cigarettes in Virginia and sell them in New York.

:)


39 posted on 01/07/2014 7:56:45 AM PST by libertarian27 (FreeRepublic Cookbooks 2011 & 2012 - Click Profile)
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To: PapaBear3625
"Black market cigs": Having a buddy/relative living in Virginia, who brings a few cases of cigs every time he visits.

After 50 years of smoking, I quit over 5 years ago.

I live in central Illinois, My mother,whom I visit as often as I can, lives in southern Missouri. Every time I visited her, I stoced up on lower tax Missouri cigarettes, saving about $20 per carton. The money I saved more than paid my expenses for the 650 mile round trip.

On an early occasion of doing this, I had a clerk warn me about paying with a Visa debit card. He told me that Visa and other major cards were reporting such purchases to other state's government. From then on I paid in cash.

40 posted on 01/07/2014 7:59:01 AM PST by Graybeard58 (_.. ._. .. _. _._ __ ___ ._. . ___ ..._ ._ ._.. _ .. _. .)
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To: nascarnation

You can still buy cartons from an Indian Rez’ for way under $20. Lots of profit to be made in high tax states.


41 posted on 01/07/2014 8:00:33 AM PST by Beagle8U (Unions are Affirmative Action for Slackers! .)
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To: Hoodat

42 posted on 01/07/2014 8:02:38 AM PST by dfwgator
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To: libertarian27

But they are looking for truckloads, your odds of being caught go way up.

A small car will hold 100-150 cartons in the trunk and expenses are cheap.

One trip a week to NY, selling for half price...$6,000 a week in profit with little chance of being caught driving them in.


43 posted on 01/07/2014 8:08:01 AM PST by Beagle8U (Unions are Affirmative Action for Slackers! .)
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To: Beagle8U

Years ago I lived in the NY area and I could never figure out why the barbers in the barber shop I went to sold cartons of cigarettes that were openly displayed in a glass case. Finally, I asked and they explained it to me. Of course, they weren’t driving to down to get them - there was a middleman.


44 posted on 01/07/2014 8:16:41 AM PST by RightGeek (FUBO and the donkey you rode in on)
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To: dfwgator

The movie Goodfellas came to my mind when I read this article.

Just like the late 50’s, early 60’s, I’ll bet that organized crime is involved in the tobacco black market in the Northeast.

As of matter of fact, when I read that NY was going to raise cigarette taxes, I thought that the mob was going to love it. Who knows, maybe the mob bribed politicians to raise the tobacco tax just so they could sell out-of-state cigarettes to New Yorkers at a discounted rate.


45 posted on 01/07/2014 8:21:02 AM PST by Ticonderoga34
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To: Hoodat

I live in NY and buy hardly anything here. I buy most things on the internet with zero shipping and zero sales tax. I buy ammunition and cigarettes in Pennsylvania because of laws and taxes respectively.

They have made the purchase so expensive and inconvenient that it is worth my time to travel a few miles more to obtain such things without hassle and fewer taxes.


46 posted on 01/07/2014 8:29:31 AM PST by Ouderkirk (To the left, everything must evidence that this or that strand of leftist theory is true)
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To: Ouderkirk
Just throwing this out there as a warning. Back in the late 90’s, I worked with a guy who would buy his smokes online from an Indian reservation with a CC for he and his wife. Somehow the state of NJ wound up with transaction records from the reservation and sent him a tax bill for just over 5k.

I live in NJ and work in PA. The cost difference between the states is about 2.50 per pack cheaper in PA. NJ now gets no cigarette tax revenue from me.

47 posted on 01/07/2014 8:44:47 AM PST by SouthParkRepublican
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To: Ouderkirk

I’m with you.

Zero shipping both ways and you can even try on clothing.

When I can’t avoid shipping I try to avoid sales tax. I’d rather pay shipping than give The Commonwealth of Massachusetts one more cent.

I’ve always detested shopping in stores.

.


48 posted on 01/07/2014 8:46:18 AM PST by Mears
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To: VerySadAmerican

In related news, Bloomberg DEMANDS background checks on anyone buying cigarettes anywhere in North America (except Mexico, of course).

35% of taxes collected in other states to go to NY to make up for “stolen revenue”.


49 posted on 01/07/2014 8:51:34 AM PST by BwanaNdege
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To: ZX12R
The fact that you or the government has an opinion about smoking, should have no bearing on the price or availability of tobacco. You should learn to mind your own business and let the market decide.

You are missing my point. The only effect my personal opinion has about smoking is in regard to price since I will never be part of the demand curve.

As for the government, they have a heavy influence on price since they attach taxes at every level of sales and profits as well as controlling supply via subsidies, all of which go against my capitalistic beliefs.

The point I was making is that it is the government that makes the case that tobacco is dangerous and addictive, yet refrains to use its powers to ban it. Instead, they profit off of the very product they demonize, and have a vested interest to do so for quite a long time.

This same government has a vested interest in decreasing the life expectancy of the average American in order to decrease its own liability. And this same government knows that cigarettes help cause premature death.

So this government acting in its best interests (and with the power of the gun) will continue to ensure that cigarettes are available for all while it continues to profit greatly from those sales, all while playing the Big Brother role to the hilt.

As for you personally, I assume you haven't quit smoking yet. You have my sympathy. I know how disappointing it must be to you every time you fork over $25 each week for a carton of smokes, thinking about all the other things you will miss out on buying instead. As for Cuba, I regret to inform you that the people running that country are also running this one. So for a freedom-loving capitalist such as myself, there's really no where left to go.

The only hope remaining for me is that I will actually get to collect Social Security when I retire. And the only way that will happen is if a good fraction of the people in my age group die off before they reach 65. So smoke up, Johnny. If it was up to me, I would be giving out free cigarettes to grade school kids.

50 posted on 01/07/2014 9:03:44 AM PST by Hoodat (Democrats - Opposing Equal Protection since 1828)
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