Should D.C. Have the Highest State Cigarette Tax in the Country?
From: Tax Foundation
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Increasing Cigarette Taxes Will Exacerbate Black Markets
Another unintended consequence of high taxes on cigarettes is that large disparities in taxes among states encourage illicit movement of cigarettes across state lines to evade taxes.
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One experience I had really made the magnitude of this issue sink in for me. A few years ago, I was asked to testify before the U.S. Senate Finance committee on this cross-border issue, and I wanted to see how easy it was to procure an improperly stamped pack of cigarettes. Even I was surprised that at the very first D.C. bodega I visited, the pack of cigarettes I bought had a Virginia tax stamp on it. This is illegal—but the practice will likely grow in prevalence if District cigarette tax rates increase.
