Thanks to city and state taxes that add $5.85 to the retail price, New Yorkers commonly pay more than $10 for a pack of cigarettes. But at two shops in Chinatown and on Staten Island, customers can get cigarettes for half that price by rolling their own from loose tobacco and paper tubes, using the stores' machines. The proprietors argue that they owe no cigarette tax because they are not selling cigarettes, merely the materials needed to make them. The city, not surprisingly, disagrees. "By selling illegally low-priced cigarettes," it complains in a federal lawsuit, "defendants not only interfere with the collection of city cigarette taxes, they also impair the city's smoking cessation programs and impair individual efforts at smoking reduction, thereby imposing higher health care costs on the city and injuring public health."
[Thanks to Richard Cowan for the tip.]