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Black Market for Smokes Heats Up

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Lawmakers in Albany decided that, if New Yorkers want to light up cancer sticks, it’s going to cost them. In fact, New York cigarettes are now the most expensive in the country.

In NYC, for instance, the average price of Marlboros is now $11.60, with some shops charging as much as $14. The thinking among state legislators: increasing the excise tax would provide needed revenue and also discourage smoking, thereby reducing the cost of health care.

What happened next? The New York Post explains:

“The underground tobacco market is spreading like a fast-growing cancer in the wake of tax hikes that make New York cigarettes the most expensive in the nation -- and it's costing the state tens of millions a month in lost tax revenue.

Illegal cigarettes are pouring into neighborhood bodegas by the truckload from neighboring Indian reservations, lower-tax states in the South and even as far away as China.

About 30 million packs are being sold legally each month -- down from 41 million packs a month before July.

The plunge far exceeds tobacco-control experts' predictions that sales would fall 8 to 10 percent, indicating that smokers are finding other means to get their nicotine fix.

In fact, the New York Association of Convenience Store Owners estimates that as many as half of all cigarettes consumed in the state lack proper tax stamps.

Still, state officials maintain the tax is worth it as an incentive for people to quit -- and the higher tariff makes up for the bootleg losses. Cigarette taxes brought the state $139 million in October of this year compared with $108 million in October 2009.” (Hat tip: Newmark’s Door)
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