From: Bloomberg/BusinessWeek
By Mark Niquette and Esmé E. Deprez
Higher cigarette taxes are prompting a burgeoning smuggling trade along routes such as I-95 on the East Coast, and states are trying to stem the flood of illegal smokes to fight crime and regain lost revenue.
Lawmakers in Virginia and Maryland passed bills boosting the penalties on smuggling in the past year, and the Massachusetts Commission on Illegal Tobacco released a report March 1 with recommendations to crack down on trafficking. Legislation is also pending in states including New Jersey and Rhode Island.
As states and the federal government raised tobacco taxes, the profit incentive for smugglers increased. There’s a rate disparity as high as $4.18 per pack between tobacco-producing states like Virginia and North Carolina and places such as New York, where an estimated 57 percent of cigarettes smoked are smuggled. States are cracking down to prevent the loss of billions of dollars in revenue and combat an increase in organized crime.
“We are all-hands-on-deck as far as cigarette smuggling because it’s no longer a mom-and-pop operation,” said Maryland Comptroller Peter Franchot, who has pushed for anti-smuggling legislation. “It’s something that significant criminal entities
are involved in, and it’s a target-rich environment.”
