Thursday, January 14, 2010

Study: Cigarette smuggling will grow with tax increase

The Michigan-based Mackinac Center issued a warning yesterday that a $1.00 increase in Washington's cigarette tax would "ensure that half of all cigarettes smoked in Washington are smuggled in from other states." From Mackinac's blog: "In December 2008 we published a study "Cigarette Taxes and Smuggling: A Statistical Analysis and Historical Review." The study reviewed the efforts of states trying to fight the growth of smuggling, documented the history of cigarette taxes in Michigan, New Jersey and California, and modeled the level of illicit tobacco use in states due to cigarette tax rates. We recently updated the model to include changes to the Federal Excise Tax, as well. The 2008 study already found that Washington has the fourth highest smuggling rate. In applying the model to the proposed tax increases, we found that a $1.00 per pack increase in taxes would jump the state's smuggling rates from 39.3 percent to 51.5 percent . . . READ MORE


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