Cigarettes

Soaring Cigarette Taxes Create a Wildly Lucrative Market for Smugglers

More than 60 percent of all cigarettes sold in New York are smuggled

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Wanna make a quick $1,944,000? Buy a truckload of cigarettes in Virginia and sell them in New York.

Yeah, it's illegal. But that's how much can be made from selling a tractor trailer's worth (that's 800 cases, each holding 600 packs of cigarettes) of low-tax Virginia cigarettes in high-tax New York, based on estimates from the Bureau of Alcohol, Tobacco, Firearms and Explosives.

And that's exactly what criminals are doing.

In 2011, more than 60% of all cigarettes sold in New York were smuggled in from another state, according to the Mackinac Center for Public Policy, a free-market think tank. That's up from about 36% in 2006.

It's not just happening in New York. Mackinac says 15 states have smuggling rates that top 20%. Add in counterfeit cigarettes from overseas, and ATF estimates the lost government revenue at more than $5 billion a year.