Analysis: High Cigarette Taxes Contributes to Increased Smuggling

Posted at 10:05 AM, Jan 08, 2013
and last updated 2013-01-08 11:56:21-05

MIDLAND, Mich. – More than 29 percent of Michigan’s total cigarette consumption in 2011 was smuggled into the state, according to the Mackinac Center for Public Policy.

The Center released Tuesday its latest estimates for smuggling rates in 47 of the 48 contiguous states.  Michigan saw its overall rate increase 12.7 percent.  According to the data, Michigan has the 10th highest smuggling rate in the entire nation.

Center analysts say that as cigarette excise tax rates increase, so too does rampant smuggling.

“Cigarette smuggling is far from new but the degree to which illegal smokes are crossing from lower tax jurisdictions to higher ones is,” said Todd Nesbit, and adjunct scholar with the Mackinac Center and co-author of the analysis.

New York state has the top smuggling rate in the nation with 60.9 percent.