From: Mackinac Center for Public Policy
More than 27 percent of Michigan’s total cigarette consumption in 2012 was smuggled into the state, according to Center study
For Immediate Release
Monday, Feb. 17, 2014
Contact:
Ted O’Neil
Media Relations Manager
989-698-1914
MIDLAND — The Mackinac Center for Public Policy today released its latest estimates for cigarette smuggling rates in 47 of the 48 contiguous states for 2012, including Michigan, which saw its overall rate decrease from 29.3 percent to 27.6 percent. Michigan still has, however, the 10th highest smuggling rate in the nation.
“As long as the Great Lake State insists on maintaining high cigarette taxes, it will continue to suffer from illicit trafficking,” said Michael LaFaive, director of fiscal policy and co-author of the study. “The state has turned packs of cigarettes into little gold bars for the criminal class, who are only too happy to smuggle them for profit.”
This is the fourth set of smuggling rate estimates published by Mackinac Center analysts, with previous reports published in 2008, 2010 and 2013. The data means that for every 100 cigarettes consumed legally in Michigan, another 27 are smuggled in.
“Excise taxes do change consumption behavior, but they also increase tax avoidance so politicians often wrongly equate exact legal paid sales declines with people kicking the habit,” LaFaive added. “In reality the people are often just obtaining their smokes through different and often illegal channels.”
The top smuggling rates in the nation — according to the Mackinac Center’s new study — are New York (56.9 percent); Arizona (51.5 percent); New Mexico (48.1 percent); Washington state (47.8 percent); and Wisconsin (35 percent). This is the first appearance for Wisconsin in the top five. The Badger State was ranked as low as 18th in 2006.
“Our smuggling figures — and those of other scholars, too — still show a significant amount of cigarette smuggling in the United States, despite the best efforts of law enforcement to stem the problem,” said Todd Nesbit, senior lecturer in economics at Ohio State University and study co-author.
