N.Y. is top destination for smuggled cigarettes
A study released in March by a tax group shows an increase in cigarette smuggling to New York, which tops the list as the top smuggling destination and the state with the highest tax rate on cigarettes.
New York was also the highest ranked in a similar report last year by the Mackinac Center for Public Policy, a research group based out of Michigan.
The Tax Foundation wrote in its March 19 report that the highest inbound cigarette smuggling state was New York followed by Arizona, New Mexico, Washington and Wisconsin. The highest outbound cigarette smuggling state was New Hampshire, followed by Wyoming, Idaho, Virginia and Delaware.
Cigarette smuggling to New York has risen by 59 percent since 2006, as the tax rate increased 190 percent over the same period, according to the Tax Foundation.
The organization’s report came to the conclusion that large differences in cigarette tax rates state by state has led to a larger smuggling reward for criminals. New York has a tax rate per pack of $4.35 (with an added $1.50 in New York City), while nearby New Hampshire has a tax rate much lower at $1.78.
From 2003 to 2010, adult smoking has declined by 29 percent in New York, much faster than the 9 percent it dropped in the entire United States, according to Tobacco Free NYS.
Many groups that promote higher taxes on cigarettes and smoke-free indoor and outdoor areas argue that the laws discourage smoking, which lowers cigarette-related deaths and causes a decline in children picking up the habit.
North Country smuggling
Lt. Brent Davison, with the New York State Police’s narcotics unit, said smuggling the department sees is usually heading north of the border.
“Mostly what we are seeing with smuggling is they go north to Canada,” Davison said.
Canada increased taxes this year on cigarettes to $21.03 per carton, the National Post, a Canadian newspaper, reported.
Many smuggling cases come from Indian reservations. Some businesses legally produce native-brand cigarettes, which other individuals sell and ship illegally, Davison said. (Editor’s note: This paragraph has been corrected.)
Davison said there is not one main state route or thoroughfare for cigarette smuggling.
“Some people may know the back roads, but a lot of the people who do this aren’t from the area.” Davison said. “There is no one road that stands out in my mind.”
The ways cigarettes are smuggled can differ from manufacturing counterfeit state tax stamps to counterfeit versions of legitimate brands, hijacking cigarette shipments, buying cigarettes wholesale in low-tax states and shipping them illegally out of state, and legitimate companies producing cigarettes and then selling them illegally across state borders.
Davidson said cigarette busts are less common than those for illicit drug smuggling like heroin for example, which he said appears to be increasing.
Criminal penalties for cigarette smuggling range depending on the magnitude of the cigarettes transported. For more than 30,000 cigarettes the punishment is a class D felony, for 10,000 cigarettes it is a class E felony, and for fewer than 10,000 cigarettes it is a misdemeanor, according to state police.
Two cartons is the legal limit in New York for transporting cigarettes.
Indian tribes are exempt from taxation on cigarettes, although it’s illegal for them to sell tax-free cigarettes wholesale. Reservations are located in Akwesasne, central and western New York. Local businesses on reservation land sell cigarettes for as low as $40 a carton.
Gov. Andrew Cuomo led a legal battle against businesses on Indian reservation land selling popular name-brand cigarettes. He has also said New York has the right to tax Indian-made cigarettes sold to non-Indians, but has done little to enforce it, the New York Times reported.
A man was charged on Sunday for smuggling 58 cartons of untaxed cigarettes on the Adirondack Northway by Queensbury-based state police.
William E. Bray, 24, from Ballston Spa, was charged with two felonies: evading cigarette taxes and possessing more than 10,000 untaxed cigarettes. Bray was speeding at the time he was stopped and was also found to be in possession of a small amount of marijuana, state police said. Bray was released on a ticket to appear in the town of Chester Court on a later date.