The Search for Cheap Smokes

In a Hartford Advocate piece (where I make a brief appearance), Jennifer Abel, a frequent Hit & Run commenter, considers possible reactions to Connecticut's new $2-a-pack cigarette tax:

If you have friends in low-tax states, it's easy to have them buy cheap cigarettes and mail them to you. However, not everybody has connections in tobacco country. The most popular means of buying out-of-state smokes is to order them over the Internet, but smokers who avoided taxes this way got an unpleasant surprise last month.

"The Department of Revenue Services will begin sending notices … to Connecticut residents who owe the state taxes," said a DRS press release. "The initiative is part of an effort by the agency to ensure taxpayer compliance with state cigarette laws."…

Not every Internet customer will get a bill for back taxes, though. While most mail-order companies are required by the [federal] Jenkins Act to hand their customer lists to the government, one subset of retailers is exempt: Indian tribes who sell tax-free cigarettes are technically sovereign nations where U.S. law doesn't apply…

Allofourbutts.com is just one of many New York-based Indian cigarette sellers, this one run by the Seneca Indian Nation. The Advocate called to ask if the tribe turned its customer records over to state revenue departments. "We're exempt from that right now," said the woman who answered the phone (and preferred not to be named). "They're trying to get our information, but so far they haven't."

Connecticut's cigarette tax is now as high as Alaska's, Arizona's, and Maine's, in fourth place among state levies behind Washington's ($2.025), Rhode Island's ($2.46), and New Jersey's ($2.58). The lowest state tax is South Carolina's (7 cents); the average is $1.07. New York City's $3 state-and-local combo still has them all beat.