Soaring taxes gives rise to cigarette black market

Global Business

About 1 in 5 deaths per year in the United States are related to smoking. As a result, many states are trying to raise tobacco taxes to make smoking more costly and less appealing, but one of the unintended consequences of higher taxes has been a soaring black market for cigarettes. CCTV’s Karina Huber is in New York City which has the highest cigarette taxes in the US.

Soaring taxes gives rise to cigarette black market

Soaring taxes gives rise to cigarette black market

About 1 in 5 deaths per year in the United States are related to smoking. As a result, many states are trying to raise tobacco taxes to make smoking more costly and less appealing, but one of the unintended consequences of higher taxes has been a soaring black market for cigarettes.

  • High taxes are forcing smokers to find other ways to get cigarettes.
  • Nearly 60 percent of cigarettes bought in New York City are contraband.
  • The average cost for a pack of cigarettes in New York City is almost $15. That’s because there’s a state tax of $4.35, a city tax of $1.50 and a federal tax of $1.01.
  • That’s almost three times what it costs in the state of Virginia, the source of nearly half the smuggled cigarettes.
  • Data has shown for every 10 percent increase in the cost of cigarettes, there is a seven percent drop in teens who smoke and four percent of adults.
  • In recent years, adult smoking in New York City has crept up. Seilback believes the solution lies in raising taxes further and beefing up law enforcement.