Massachusetts officials are dismayed that there is a burgeoning black market in cigarettes. Surprise, surprise, surprise. Black markets are what happen when we ban things or tax them too heavily. And the solutions the state seems ready to offer up will only make things worse.
The feds and each state impose taxes on cigarettes, with state excise taxes ranging from a low of 30 cents a pack in Virginia to a high of $4.35 in New York. Massachusetts ranks second, at $3.51. (iI increased by $1 last August.) The reasons for the taxes are two-fold. One, of course, is money: The Bay State collects over $500 million annually from tobacco. The second is the hope by health officials that higher prices will cut consumption.
Leave aside the inherent contradiction of this (the state relying on revenue from tobacco users while at the same time saying it doesn’t want people to use tobacco) and consider the impact on smokers themselves. In Massachusetts, name brands are now around $10 a pack; a pack-a-day smoker is dropping about $70 a week. Some smoke less or quit, which is what the public health crowd wants. Some just suck it up and pay the price. Others, however, are a little more devious.
Actually, it turns out, a lot of people are more devious. Tobacco giant Altria estimates that 16 percent of cigarettes in Massachusetts are sold on the black market, thereby avoiding the state excise tax. Research firm RTI International says that 30 to 42 percent of cigarettes in five Northeastern cities were smuggled, with the number at 40 percent in Boston.
And it’s easy to be devious: Just drive to another state with low excise taxes and buy them there. New Hampshire, for example, charges just $1.78 in excise taxes. Make a quick trip north for five cartons, and you’ll save over $86. Or if driving seems too tough, just go online. One cigarette website will sell you a case of Marlboros for $29.78 — a savings of more than $64 (!!!) over the Bay State’s prices.
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