NCPA - National Center for Policy Analysis

Cigarette Smuggling

December 4, 2012

Smugglers are turning their attention from buying and selling various drugs and firearms to reselling cigarettes on the black market. I-95, the long-time conduit for handguns bought in Virginia and sold to drug-dealers in New York, is now being used to illegally resell cigarettes, known to police as smurfing, says The Economist.

  • Virginia's tobacco tax is the second-lowest in America.
  • Smugglers take advantage of this and buy in bulk then sell the cigarettes at enormous profits in states like New York.
  • This is especially profitable considering Virginia taxes cigarettes at 30 cents per pack whereas New York imposes a tax of $4.35 per pack.
  • The Bureau of Alcohol, Tobacco, Firearms and Explosives estimates that these illegal sales cost local, state and federal governments nearly $10 billion a year.

The growth of cigarette smuggling can be linked to various government initiatives that make smurfing an attractive option.

  • Since 2007, 27 states have raised their cigarette taxes in an effort to reduce deficits or cover increases in health care costs.
  • However, this has resulted in a desire for cheaper cigarettes.
  • In New Jersey, for example, 40 percent of all cigarettes are smuggled from other states.
  • Moreover, the penalty for smuggling cigarettes is a maximum of only five years in jail.

In response to this, Virginia has declared it illegal to buy and possess, with intent to sell elsewhere, more than 5,000 cigarettes. It may sound like a lot, but 600 cartons (10 packs of 20 cigarettes) can easily fit into a car, which makes it easy for law enforcement to miss.

Source: "The Urge to Smurf," The Economist, November 24, 2012.


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