From: Human Events
By: Michael D. LaFaive and Todd Nesbit
As state and local units of government continue to hike cigarette excise taxes to raise revenues, smugglers apparently continue to profit from their illicit trafficking.
Nationwide, our research — and other academic papers — suggest that cigarette smuggling is not abating dramatically. There is both empirical and recent anecdotal evidence to suggest the problem is increasing in some areas along with big excise tax hikes.
We have just published our fourth set of smuggling estimates for 47 of the 48 contiguous states, expanding our research to include data through 2012. Previous editions were released last year as well as in 2008 and 2010.
The 2008 and 2010 reports contain detailed explanations of the statistical modeling effort we use. In short, the model matches up legal paid sales vs. predicted smoking rates. The difference between the two is our total smuggling rate, which we then compare to variables based on cigarette tax rates. Our model has been peer reviewed by doctorate-level economists and its output is relatively similar to that of other scholarly efforts.
