Following the deficits experienced by most states in America, state authorities are now cashing on any possible options to handle these seemingly ever-growing deficits.
One of the areas that many states seem to have placed a focus on is in the area of cigarette taxes.
According to a report by Mackinac Center for Public Policy, 27 states have raised their taxes between 2007 and 2010.
These rises in tobacco taxes have lead to major differences in prices of the cigarettes between different states.
Smokers in Virginia for example are having a good time with a pack of cigarettes costing $4.
50 as compared to a smoker in Arizona or New York who has to part with about $13 for the same pack of cigarettes.
The highest tax levied on cigarettes is Arizona at a rate of 51.
8% with other states such as Rhode Island, New Mexico, New York and California following closely.
Some of the most recent states to join the tobacco tax hike bandwagon are Maine, Alabama, and Louisiana.
The huge discrepancies in the prices charged on cigarettes due to different state taxes on the commodity have led to the prevalence of cigarette smuggling.
Through online purchases and illegal distributions, merchants in low-cigarette-tax-rate states are exporting cigarettes to the high-tax-rate states and evading taxes in the process.
The smuggling of cigarettes across different states has led to a tax gap of over $5 billion lost by states in terms of unpaid taxes.
There is so much illegal cash being made by the tobacco smugglers that illegal weapons and drug trafficking cartels are now including cigarettes as part of their illegal trafficked products due to the high profitability.
Following the high rate of tobacco smuggling, various states are losing lots of tax cash that they are otherwise seeking to make through such tax hikes.
It is therefore, it is becoming counterproductive for such states to hike taxes only to lose the whole tax amount through smuggling.
However, as long as some states charge significantly lower tax rates on cigarettes, the smuggling menace is bound to persist.
It is expected however, that the remaining 23 states that have not hiked cigarettes taxes in the last 4 years will do so and thereby, remove or at least decrease the smuggling epidemic.
Meanwhile, states most affected by smuggling continue to fight with such offenders.
In New York City for example, the federal government has filed a lawsuit against 32 residents who imported bulk cigarettes through an online purchase and distributed them in the state without paying taxes between the period of 2003 and 2009.
The state is claiming unpaid taxes of $6.
5 million and penalties amounting to $13 million for the 437,721 cartons that they claim were distributed within this period.
They have also enjoined Chavez Inc.
, the online merchant who sold the cigarettes to 13 of these residents.
In spite of the smuggling, there are at least a few positive aspects that have come with the tax hikes on cigarettes.
As the price of cigarettes goes higher, more people are unable to afford and sustain a smoking habit.
The reduced smoking rate and the increase in individuals who quit smoking will not only save the states in health costs, but will also mean a healthier workforce.
Hopefully, as the remaining states raise cigarettes taxes to defer smuggling, the result will end with a healthier nation.
One of the areas that many states seem to have placed a focus on is in the area of cigarette taxes.
According to a report by Mackinac Center for Public Policy, 27 states have raised their taxes between 2007 and 2010.
These rises in tobacco taxes have lead to major differences in prices of the cigarettes between different states.
Smokers in Virginia for example are having a good time with a pack of cigarettes costing $4.
50 as compared to a smoker in Arizona or New York who has to part with about $13 for the same pack of cigarettes.
The highest tax levied on cigarettes is Arizona at a rate of 51.
8% with other states such as Rhode Island, New Mexico, New York and California following closely.
Some of the most recent states to join the tobacco tax hike bandwagon are Maine, Alabama, and Louisiana.
The huge discrepancies in the prices charged on cigarettes due to different state taxes on the commodity have led to the prevalence of cigarette smuggling.
Through online purchases and illegal distributions, merchants in low-cigarette-tax-rate states are exporting cigarettes to the high-tax-rate states and evading taxes in the process.
The smuggling of cigarettes across different states has led to a tax gap of over $5 billion lost by states in terms of unpaid taxes.
There is so much illegal cash being made by the tobacco smugglers that illegal weapons and drug trafficking cartels are now including cigarettes as part of their illegal trafficked products due to the high profitability.
Following the high rate of tobacco smuggling, various states are losing lots of tax cash that they are otherwise seeking to make through such tax hikes.
It is therefore, it is becoming counterproductive for such states to hike taxes only to lose the whole tax amount through smuggling.
However, as long as some states charge significantly lower tax rates on cigarettes, the smuggling menace is bound to persist.
It is expected however, that the remaining 23 states that have not hiked cigarettes taxes in the last 4 years will do so and thereby, remove or at least decrease the smuggling epidemic.
Meanwhile, states most affected by smuggling continue to fight with such offenders.
In New York City for example, the federal government has filed a lawsuit against 32 residents who imported bulk cigarettes through an online purchase and distributed them in the state without paying taxes between the period of 2003 and 2009.
The state is claiming unpaid taxes of $6.
5 million and penalties amounting to $13 million for the 437,721 cartons that they claim were distributed within this period.
They have also enjoined Chavez Inc.
, the online merchant who sold the cigarettes to 13 of these residents.
In spite of the smuggling, there are at least a few positive aspects that have come with the tax hikes on cigarettes.
As the price of cigarettes goes higher, more people are unable to afford and sustain a smoking habit.
The reduced smoking rate and the increase in individuals who quit smoking will not only save the states in health costs, but will also mean a healthier workforce.
Hopefully, as the remaining states raise cigarettes taxes to defer smuggling, the result will end with a healthier nation.
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