State Tobacco Taxes Leads to Cigarette Smuggling

As a growing number of states increase tobacco taxes to raise revenues, violent gangs and drug traffickers are moving into the cigarette smuggling business, USA Today reports. Larry Penninger, Acting Director of the Tobacco Diversion Unit of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), told the newspaper that investigations and prosecutions involving tobacco trafficking have been on the rise as smugglers move cigarettes from low-tax states into high-tax states.

Twenty-seven states raised their cigarette taxes between 2007 and 2010, according to the Mackinac Center for Public Policy in Michigan.  New York, where a pack of cigarettes sells for an average of $13 a pack, has the highest taxes. In Virginia, a low-tax state, cigarettes sell for about $4.50 a pack, the article says.

Smuggling costs states and the federal government about $5 billion, USA Today notes.