Delaware: Smuggled cigarettes exporter
Today's column is about Maryland's cigarette smugging industry, which was fabulously energized by the decision to raise Maryland cigarette taxes from $1 to $2 a pack in 2008. The gap between Maryland's tax and Virginia's tax of 30 cents a pack means there is good money to be made by loading up the minivan with smokes in Virginia and reselling them here.
I didn't have room to mention Delaware, which is also making a name for itself as an illicit tobacco supplier. The folks at Michigan's Mackinac Center for Public Policy ran numbers on tax discrepancies between the states and the proximity of high-tax states to low-tax states. They fingered Delaware as a huge cigarette smuggling source along with Virginia. Delaware's cigarette tax used to be 55 cents per pack but recently went up to $1.15, according to the Tax Foundation. Even so, Delaware is close enough to states with REALLY high cig taxes such as New York that you can make some money by making the trip from New York City to Wilmington.
New York's tax is $2.75 per pack. Tiny Rhode Island's is $3.46. You think any smuggling happens in Rhode Island?
Comments
So, once again we are left with deciding which is the true intent and motivation as regards cigarette and other punitive "sin" taxes. The only real solution as regards cigarettes seems to be the outright banning of them as a legal product.
Not tobacco itself... just the pre-packaged and oh so highly advertised spawn of Wall Street and Madison Avenue.
I know that the last hike in taxes was the impetus I needed to quit smoking. I quit buying actually... the not smoking comes along for the ride on that. Now to translate that approach to calories.
Posted by: MrRational | January 27, 2010 11:31 AM
I'm suprised Maryland hasn't taken their usual response to the problem of not knowing the total amount of untaxed cigarettes i.e. Regulate this industry and established . The DEPARTMENT OF UNTAXED CIGARETTES.
J D.
Posted by: john david | January 28, 2010 12:50 PM
Here in the state of Indiana taxes are quite high on cigarettes as of the last 62 cent addition.
With the federal tax coming in at $1.00 and the states at 99.5 cents. A pack of cigarettes now cost around $5.75 depending on the brand, of course.
They say that ten months after the state tax increase that cigarette sales declined by 17.8 percent.
Now with the addition of the 62 cent increase they project the number of smokers in Indiana to drop by 27,600 less smokers.
Who knows.
I'm not a smoker any more. I quit when the prices had reached the $1.75 mark.
You have to wonder, who are the people quitting? Are they upper level income bracket or poverty bracket, and does this help or hurt the economy.
As far as cigarettes being smuggled in from surrounding states to Indiana, I have no idea.
When I quit smoking adding the calories wasn't a bad thing because I took up weight training, and that led to Powerlifting. So all is good.
Posted by: Randy the Electronic Cigarette Advocate | July 31, 2010 3:48 PM