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Study: Sin taxes actually cause illegal behavior

Apparently, sin taxes can lead to sinful activities.

Due to heavy excise taxes on tobacco products in some states, the United States is facing a cigarette smuggling epidemic.

In a study conducted by the Mackinac Center for Public Policy, researchers found that the top five states that received smuggled cigarettes were New York (56.9 percent); Arizona (51.5 percent); New Mexico (48.1 percent); Washington state (47.8 percent) and Wisconsin (35.0 percent).

New York state has the highest cigarette excise tax in the country at $4.35 per pack. Washington state also ranks in the top five with a per pack fee of $3.025.

The average state-wide sin tax for a pack of cigarettes is $1.457 per pack, meaning these states are more than double, and in New York’s case, triple, the national average. This figure does not even include the federal excise tax on cigarettes, which is $1.0066.

As of 2009, the federal excise tax was only $0.39. Last year in his proposed 2013 budget, President Obama recommended that this tax rise to $1.95 per pack.

Due to heavy excise taxes on tobacco products in some states, the United States is facing a cigarette smuggling epidemic.

Because some states do not rely on high taxes to curb smoking habits, cigarettes bought within these havens are being sold to smokers in other states. The leading states who smuggled their cigarette products across state lines were New Hampshire (25.0 percent); Wyoming (22.3 percent); Idaho (21.3 percent); Virginia (21.1 percent); and Delaware (20.9 percent).

The report also noted a 2012 study published in Tobacco Control, which examined illicit cigarettes in “socioeconomically deprived” neighborhoods (South Bronx, New York) and found that 57.9 percent of the cigarettes packs collected were untaxed.

Overall, the average smuggling rate of the top 10 in-bound smuggling states makes up 39.1 percent of consumption. The average smuggling rate for the top 10 out-bound smuggling states totals 12.8 percent of consumption.

Excise taxes are designed to discourage bad behavior, while creating additional tax revenue for the federal and local governments. Cigarette use has been on the decline for decades, before many states established costly excise taxes. Thus, it is unclear whether the additional taxes are fulfilling the purpose they were originally intended to.

The Mackinac study says that high excise taxes not only incentivize people to smuggle cigarettes, but they can lead to other illicit activities, including theft, large-scale organized crime, adulterated and dangerous products, and violence.

The authors of the study concluded with, “Unless tobacco excise tax rates start coming down,” we will likely continue to see smuggling and other illegal activities.

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