Cigarette Smuggling to New York City

Cigarette Smuggling to New York City

This article relates to Improvement

In Joan Silber's Improvement, one of the characters starts a cigarette-smuggling venture after getting out of Rikers prison.

A carton of cigarettes might cost around $55 in Virginia but close to double that in New York City because of steep taxes. New York state has the highest state tax on cigarettes and New York City imposes an additional $1.50 on each pack. But smuggling cigarettes from states like Virginia has led to the undercutting of cigarette prices in the Big Apple and increased tobacco addiction among youth – exactly what the tax hikes had been instituted to prevent. Both the smugglers and the retailers who sell these cigarettes at below market price make a hefty profit off of sales.

According to an article in The Huffington Post, a Justice Department study found that "the incentive to profit by evading payment of taxes rises with each tax rate hike imposed by federal, state, and local governments." The article further states that "that year, the head of the tobacco-diversion division of the Bureau of Alcohol, Tobacco, Firearms and Explosives told The Wall Street Journal that states were losing an estimated $5 billion each year due to cigarette smuggling. New York state alone, according to officials in 2011, was losing $525 million a year. A report from the Tax Foundation found that 57 percent of cigarettes consumed in New York state in 2012 were smuggled into the state illegally."

Legislation to undercut these smuggling efforts has been passed but the problem continues. The Prevent All Cigarette Trafficking Act bans the sale of cigarettes online unless the requisite state taxes are collected. Seized contraband cigarettes in New York and New Jersey are now destroyed rather than sold again at auctions. A track-and-trace system whereby the government can track the sales of cigarettes from point of manufacture to consumer has been called for by New York City and the American Lung Association, but has not yet been instituted.

In May 2017, a major smuggling racket was uncovered in Richmond, Virginia (which is where the characters of Improvement go) with crimes ranging from smuggling to money laundering. Many indictments were handed down.

Incidentally, the smuggling of tobacco is not restricted just to the Northeast corridor of the US. It is a problem all over the world.

Anti-smuggling sign
Trunk full of cigarettes, courtesy of www.eureporter.co
Smuggled cigarettes in Hong Kong, courtesy of David Wong

Filed under Society and Politics

This "beyond the book article" relates to Improvement. It originally ran in November 2017 and has been updated for the August 2018 paperback edition. Go to magazine.