Friday, January 11, 2013

Maryland Ranks 13th in Nation for Consumption of Smuggled Cigarettes

According to a new fact sheet from the Tax Foundation, Maryland ranks 13th in the nation for consumption of cigarettes smuggled from other states.  In 2011, consumption of smuggled cigarettes in Maryland rose to 25.8 percent, up from 10.4 percent in 2006.  This increase in smuggling coincides with a 100 percent increase in the cigarette tax.  Last year, Comptroller Peter Franchot reported that seizures of contraband tobacco had quadrupled between 2010 and 2012, and his office had seized over 325,000 packs of smuggled cigarettes. The Tax Foundation based its report on a Mackinac Center Study, which found that a rise in state cigarette taxes coincides with higher rates of smuggling.



The Tax Foundation found that 60 percent of the cigarettes sold in New York, which has the highest per-pack tax in the nation, were smuggled.
 This makes New York the biggest importer of black market cigarettes, along with the state's highest tax rate of $4.35 per pack. That's compared to Missouri, the state with the lowest rate, of 17 cents per pack. 
In New York City the tax rate is even higher, adding another $1.50 per pack to the state rate. It's not uncommon for smokers to pay $12 for a pack. 
The report said that tobacco smuggling and the tax rate have risen practically in tandem since 2006.  
The New York State tax on cigarettes has risen 190% since that time, as the rate of smuggling increased 170%. 
This bears out a report issued last month by the New York Association of Convenience Stores, estimating that "chronic cigarette-tax evasion" deprives the state of at least $1.7 billion in tax revenue and 6,700 jobs.

When Maryland doubled the cigarette tax in 2007 special legislative session, advocates promised much, including reduction in youth smoking anf increased revenues.  However, much like New York, actual revenues fell woefully short of the rosy estimates advocates like Vinny DeMarco of the Maryland Citizens Health Initiative promised.  

A reduction in youth smoking did not materialize as well, as the Maryland Department of Mental Health and Hygiene reported an increase in youth smoking between 2006-2008, prior to a decline before the tax hike. The data suggests there is no clear link between higher cigarette taxes and smoking cessation.

So in addition to creating incentives for smugglers, Vinny’s beloved cigarette tax led to less revenue and a state budget balanced on the backs of non-smokers through increases in other taxes.

So naturally, after less revenue, increased smuggling, and questionable public health benefits, Vinny DeMarco is back for another cigarette tax hike.






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