http://money.cnn.com/2013/04/16/news/economy/cigarette-smuggling/index.html?iid=SF_E_Lead
Obama's increasingly high taxes on cigarettes is making the business of smuggling them illegally between state lines even more lucrative. If one were to smuggle a truckload of cigarettes (thats 800 cases, each holding 600 packs of cigarettes) then that person could make up to $1,944,000. The profit margin is to be made in the disproportional price differences between states such as Virginia that have low cigarette taxes/prices and states like New York that have high Cigarette taxes/prices. In 2011, more than 60% of all cigarettes sold in New York were smuggled illegally. It't not just New York either; there are 15 other states where that percentage tops 20%.
This is a common occurrence and hard to tackle. I think rather than more law-enforcement, perhaps an equal cigarette tax in all states would be more successful and easier to implement. And perhaps the tax revenue may also increase as a result.
ReplyDeleteAlright arbitrage. It is illegal, yes, but what is the downside? Probably a fine upwards of $100k on a shipment such as that you have listed. So after that, you still have $1.8M, maybe a bit less, but still not a whole lot of downside. With that said, I am not surprised at that statistic at all for New York.
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