Taxes

Unscrupulous Cigarette Bargains

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Last week I noted plans to raise New York state's cigarette tax, now $1.50, to $2.75, and estimated that the increase would boost the price of a pack in New York City, which imposes a $1.50-a-pack tax of its own, above $9. On Wednesday, in a completely unrelated development, a guy was busted in New York City with millions of dollars in counterfeit cigarette tax stamps:

The fake stamps would have allowed unscrupulous cigarette dealers to evade nearly $6.1 million in state and city taxes, authorities said….

State excise tax investigator Marybeth Cherubino, who was the lead agent on the case, said that, besides dealing in counterfeit tax stamps, Al-Nablisi bought 375,000 packs of untaxed cigarettes in February from undercover investigators.

"He wanted as much as we could supply," she said….

The arrest comes as some authorities voice concern about whether New York state's planned $1.25-per-pack hike in tobacco taxes, taking the price of a pack in the city to about $9, will fuel demand for contraband cigarettes.

Health surveys have found that more than a third of New York state smokers already regularly buy cigarettes from untaxed sources.

If you live in South Carolina and you're planning a drive to New York, you might want to wait until the state legislature approves the new budget. And rent a van.

[Thanks to James Feldman for the tip.]