November 29, 2010 - 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, a Post analysis has found.
Illegal cigarettes are pouring into neighborhood bodegas (a small grocery store) by the truckload from neighboring Indian reservations, lower-tax states in the South and even as far away as China, authorities say.
Government data show that New York state is being smoked out of as much as $20 million a month from all these illegal cigarette purchases -- an estimated 7.3 million packs a month sold off the state tax radar.
In another New York Post report on November 12, 2010 - it was reported that sales of taxed cigarettes have plummeted a staggering 27 percent statewide since the highest cigarette tax in the nation took hold in July. (New York State - with tax increase in place, smokers finding cheaper cigarettes in other states/Indian reservations..)
Background: On July 1, Gov. Paterson and the Legislature increased the cigarette excise tax in New York State from $2.75 a pack to $4.35, the highest state tax rate in the country. (a href="http://snus-news.blogspot.com/2010/06/new-york-state-tobacco-taxes-increase.html">New York State - tobacco taxes increase, will be highest in nation once again..)
The first six weeks following a cigarette tax-rate increase in New York showed a plunge in sales at convenience stores statewide, mainly because most smokers are finding ways to dodge the tax altogether, according to a report from the New York Association of Convenience Stores (NYACS).
(New York State - after tax increase cigarette sales plummet in c-stores..)
New York State - as of August 1st OTPs tax goes up such as little cigars will be taxed at same rate as cigarettes..
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.
Reference: Black-market cigarettes costing NY $20M a month by DOUGLAS MONTERO, KEVIN FASICK and CHUCK BENNETT, NYPost.com, 11/26/2010.