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Cigarette Taxes and Smuggling 2010

December 17, 2010

High tax rates on cigarettes are driving up the rates of illegal cigarette smuggling, according to a report by the Mackinac Center for Public Policy in Midland, Mich.The authors calculated that in 2009, more than half (51.

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High tax rates on cigarettes are driving up the rates of illegal cigarette smuggling, according to a report by the Mackinac Center for Public Policy in Midland, Mich.

The authors calculated that in 2009, more than half (51.8 percent) of the cigarettes consumed in Arizona had been smuggled into the state, making it the leader in cigarette trafficking. The authors believe Arizona’s position is a direct function of its 82-cent per-pack cigarette tax hike in December 2006, a 2009 federal cigarette tax hike, and Arizona’s proximity to Mexico.

Rounding out the top five smuggling states are New York (47.5 percent), Rhode Island (40.5 percent), New Mexico (37.2 percent) and California (36.3 percent).

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Taxes
Author
Todd Nesbit is assistant professor of economics at the College of Charleston.