Cigarette smuggling is on the rise as taxes soar in some states but remain low in others.
On every other street corner you can find individuals discretely soliciting cigarettes for less than half of what you would pay in stores. In 2011, more than 60% of all cigarettes sold in New York were smuggled in from another state compared to 36% in 2006. It’s not just happening in New York either. 15 states have smuggling rates that top 20%. The Virginia-New York route is perhaps the most popular; as the big difference in taxes and the states’ close proximity make it an attractive route for criminals. In Virginia, the state taxes are 30 cents. In New York, they’re $4.35. New York City tacks on an extra $1.50, taking the tax bill to $5.85 per pack — the highest rate in the nation.
Add in counterfeit cigarettes from overseas. Bodegas and eateries are selling illegal loose cigarettes referred to as “loosies” to those not wanting to buy packs at the high rates. The perpetrators range from mom-and-pop operators all the way up to international terrorists, according to Campbell. Convenience store owners cross state lines to fill car trunks, while Asian and Russian mobsters smuggle by the truckload. In 2002, Mohamad Youssef Hammoud was convicted of funneling profits from a North Carolina smuggling ring to the Lebanese terrorist organization Hezbollah.
The quantity of counterfeit cigarettes coming into the country from overseas, mostly from China, is also rising. The knockoffs are particularly bothersome to the tobacco companies, and could pose an even greater danger to consumers than regular cigarettes. Armed hijackings of cigarette trucks have taken place, Campbell says, and contract killings have been ordered. This is when purchasing these cheap items can get dangerous.
A major factor in the demand for illegal cigarettes are the rising state taxes and things could get even worse if President Obama’s proposed 94-cent-a-pack cigarette tax hike goes through. Anti-smoking groups say the smuggling numbers are inflated, and that the public health benefits of fewer smokers — the ones dissuaded by pricey packs — far outweigh any lost revenue or other effects of smuggling.
Cigarette smuggling is a very lucrative business, but it’s illegal and it is a felony. If caught smuggling cigarettes, a person could spend 5 years behind prison bars.
Written By: Keshia Turner