Cigarette Smuggling Rampant In New York
Large differentials in cigarette taxes across the country have incentivized a startling and ever-increasing black market for illegal cigarettes across state lines.
According to the Bureau of Alcohol, Tobacco, Firearms and Explosives, smugglers are reportedly acquiring discounted cigarette packs from low-tax states and selling them in high-tax states, costing billions of dollars in tax revenue.
“It’s a very big problem, and it’s getting even larger,” said Charles Mulham, public information officer for the ATF New York Field Division. “I think a lot of people don’t appreciate it because of the nonviolent aspect to it (compared to drugs and alcohol).”
A recent study by the Tax Foundation indicated that 57 percent of cigarettes in New York state are illegally smuggled from other states, making it the largest importer of illegal cigarettes in the country.
This, of course, correlates with New York’s cigarette tax of $4.35 – the highest in the country -which makes it a prime target for smugglers in Virginia or North Carolina where cigarette taxes are 30 and 45 cents, respectively.
“(Smugglers) will sell (cigarettes) in bulk to these bodega-type stores with counterfeit tax stamps,” Mulham said. “(Store owners) will then pay the trafficker … and then sell the (smuggled cigarettes) at the New York rate. The traffickers and those selling (the cigarettes) are making a profit.”
In March, New York Attorney General Eric T. Schneiderman filed a $70 million lawsuit against Federal Express Corporation for unlawfully shipping approximately 80 million illegal cigarettes to consumers across New York state between 2006 and 2012.
The lawsuit alleges that FedEx made nearly 33,000 illegal shipments of cigarettes to New York consumers, amounting to more than 400,000 cartons of untaxed cigarettes and a loss of more than $10 million in state revenue.
Indeed, a likely reaction to this fiasco was Gov. Andrew Cuomo’s calling for a Cigarette Strike Force, a multi-agency force composed of federal, state and local agencies equipped to stymie the influx of illegal cigarettes.
“This new law enforcement strategy will help to crack down on these illegal cigarette sales and capture those smugglers who seek to evade the law and rob the state of the revenue it is rightly owed, thereby putting an additional burden on law-abiding taxpayers,” Cuomo said.
The Cattaraugus County Sheriff’s Department is included in the strike force.
According to Mulham, cigarette smuggling is not a rampant problem in Chautauqua County (compared to other counties), an assessment echoed by the Sheriff’s Office and the Jamestown Police Department.
“When you compare it to our drug problem, it’s not at a big level,” said Captain Robert F. Samuelson, division commander of the Jamestown Police Department.
This notwithstanding, Mulham insisted that the ATF will continue to work with local police agencies on a day-to-day basis and remain vigilant of this rampant problem.