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RI One of Top States for Cigarette Smuggling

Monday, December 20, 2010

 

Rhode Island ranks among the top five states for cigarette smuggling to avoid high in-state cigarette taxes, according to a new study by the Mackinac Center for Public Policy, which is based in Michigan.

An estimated 40.5 percent of the cigarettes consumed in the Ocean State had been individually or commercially smuggled into the state in 2009, according to the study, which blames high cigarette taxes for the activity. The current tax rate is $3.46 per pack of cigarettes—not including the sales tax.

None of the other New England states made the top five, which were, in order: Arizona, 51.8 percent; New York, 47.5 percent; New Mexico, 37.2 percent; and California, 36.3 percent.

“It should come as no surprise that states with increasing excise taxes also saw significant increases in total smuggling rates,” said co-author Todd Nesbit, College of Charleston assistant professor of economics and Mackinac Center adjunct scholar. “Taxpayers are not sheep lining up for a shearing — if they have to cross a border to save money, they will.”

State rep: 'I don't buy it'

But one local advocate of higher cigarette taxes, state Rep. Joseph McNamara, D-Cranston, Warwick, told GoLocalProv he isn’t buying it.

“I don’t buy it. I look at the data we have on youth tobacco use and the most effective deterrent our state has is raising the cigarette tax on the number of young people smoking,” said McNamara, who is the chairman of the House Committee on Health, Education, and Welfare.

McNamara said he is more concerned about loopholes in the state cigarette tax. For example, he said Rhode Island retailers are selling smaller cigars in packs that are taxed at a rate well below the normal rate for a pack of cigarettes. “To me that is much more dangerous to the health of our citizens in terms of having youth access to tobacco than folks driving up from Alabama with a truck full of Marlboros,” McNamara said.
 

 

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