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Date: April 30, 2024 Tue
Time: 1:44 am
Time: 1:44 am
Results for tax revenues
3 results foundAuthor: Alamar, Benjamin Title: Cigarette Smuggling in California: Fact and Fiction Summary: The tobacco industry fights increases in cigarette excise taxes with inflated claims of smuggling and its associated crime. The tobacco industry makes public statements regarding its commitment to stopping smuggling and the negative effects it has on their business, despite their internal knowledge that smuggling does not have a negative impact on the cigarette companies. The tobacco industry acts cooperatively to create the impression that there is grassroots level opposition to increased tobacco taxes. Once tax increases are implemented, the tobacco industry, contrary to its rhetoric, uses the tax increase to mask wholesale price increases. On average, the tobacco industry increases wholesale prices by 150% of any tax increase. Additionally, the tobacco industry appears to have increased cigarette prices by 605% of the first year cost of the Master Settlement Agreement. Previously published studies that analyzed data from various time periods between 1950 and 2000 have estimated that 2% to 6% of cigarettes are smuggled within the United States. The economic motivations for smuggling cigarettes in California are substantially lower in 2003 than they were in the early 1970s. Our new estimate of smuggling in California shows that 1% to 4.2% ($7 million to $45 million annually in lost tax revenue compared to $1.1 billion in cigarette taxes actually collected by the state) of cigarettes smoked in California are smuggled. The methods and results are consistent with the previously published literature. The California Board of Equalization differs from previous scientific studies and has estimated that smuggling is California 12% to 27% of cigarettes smoked, 5-10 times what all other authorities have estimated. The Board of Equalization uses unconventional and unreliable methods. The first BOE report (1999) utilizes an estimate of the level of smuggling based on national experience during the 1980s. It ignores the effect of California’s large and effective tobacco control program on cigarette consumption; it implicitly assumes that any drop in cigarette tax-paid sales in California beyond the drop expected from price increases was a result of increased smuggling rather than smokers cutting down or quitting as a result of the California Tobacco Control Program. The second BOE report (2003) is based on a biased sample of small retail outlets where one would expect illicit sales to be most likely. Stores such as Walmart, Sam's Club and Costco are assumed to sell smuggled cigarettes to the same extent as the small retail outlets. For these reasons, the BOE estimates should not be used as a basis for making public policy. Even if one accepts the BOE’s very high estimates of smuggling, increasing the cigarette tax will increase state revenues. Details: San Francisco: Center for Tobacco Control Research and Education, University of California, San Francisco, 2003. 25p. Source: Internet Resource: Accessed July 21, 2011 at: http://escholarship.org/uc/item/4fv0b2sz Year: 2003 Country: United States URL: http://escholarship.org/uc/item/4fv0b2sz Shelf Number: 122098 Keywords: Cigarette Smuggling (California)Illicit TobaccoTax Revenues |
Author: LaFaive, Michael Title: Cigarette Taxes and Smuggling 2010: An Update of Earlier Research Summary: Between January 2007 and 2009, 21 of the 48 contiguous states — including tobacco state North Carolina — raised their cigarette taxes, producing a total of 27 tax hikes. In 2010, tobacco state South Carolina and five other states did the same. This study updates the Mackinac Center’s 2008 publication “Cigarette Taxes and Smuggling: A Statistical Analysis and Historical Review” to reflect state and federal cigarette tax hikes through fiscal 2009. The original study used data through fiscal 2006. Our new estimates indicate that in 2009, the state of Michigan ranked 10th in the nation in smuggled cigarettes as a percentage of total in-state cigarette consumption — 26 percent. The five smuggling destination states with the highest cigarette smuggling rates were Arizona (51.8 percent of the state’s total consumption); New York (47.5 percent); Rhode Island (40.5 percent); New Mexico (37.2 percent); and California (36.3 percent). According to our calculations, Arizona’s inbound smuggling rate was not in the top five in 2006, yet we estimate that Arizona now has the nation’s highest inbound cigarette smuggling rate, with over half of all cigarette consumption coming from smuggled sources. This is probably a function of the state’s 2006 excise tax hike, the 2009 federal excise tax hike and Arizona’s proximity to Mexico. The study also breaks smuggling rates into two primary types of smuggling: “casual” and “commercial.” Casual smuggling typically involves individuals crossing borders to obtain their cigarettes for personal use. It may also involve purchases made over the Internet. Commercial smuggling involves larger, typically long-haul efforts, such as transporting cigarettes from North Carolina (a typical source state) to Michigan or elsewhere. In the casual smuggling category, Michigan’s smuggling rate ranks 5th in the nation, at 11.6 percent of total in-state cigarette consumption. Only New York (19.9 percent), Rhode Island (18.2 percent), Washington (14.5 percent) and Montana (13.2 percent) residents crossed into neighboring jurisdictions for lower-taxed cigarettes more often than those of the Great Lakes State. Remarkably, New York state earned the number one spot even before hiking state taxes by $1.60 per pack in 2010. Anecdotal evidence suggests that this recent hike has been a boon to Pennsylvania retailers just across the Empire State’s border. The states with the top inbound commercial cigarette smuggling rates are New Jersey (29.1 percent); New York (28.5 percent); Vermont (24.2 percent); Massachusetts (23.3 percent); and Connecticut (20.9 percent). Five smuggling destination states moved up by double digits between 2006 and 2009 in our state rankings of net smuggling rates: Texas, from 16th to 6th; Mississippi, from 37th to 22nd; South Dakota, from 28th to 12th; Maryland, from 24th to 9th; and Iowa, from 33rd to 15th. These large smuggling rate increases relative to those of other states can likely be attributed to the five states’ substantial state excise tax increases over the past three years. Texas increased its per-pack cigarette tax from 41 cents to 141 cents in 2007; Mississippi, from 18 cents to 68 cents in 2009; South Dakota, from 53 cents to 153 cents in 2007; Maryland, from 100 cents to 200 cents in 2008; and Iowa, from 36 cents to 136 cents in 2007. Despite the notable cigarette tax hikes in recent years, other proposals are being floated around the country. In 2009, Michigan Gov. Jennifer Granholm suggested raising cigarette taxes to $2.25 per pack, up from $2.00 per pack. That proposal never came to fruition, but we estimate that had it become law, illicit cigarette trafficking would have leapt to 28.3 percent of Michigan’s total cigarette consumption. In Illinois, according to our calculations, a proposed $1.00-perpack cigarette tax hike would cause cigarette smuggling to increase from a modest 5.9 percent of total in-state consumption to 24.3 percent. Smuggling is not the only unintended consequence of high cigarette taxes. Taxinduced smuggling can also lead to violence against people, police and property, and encourage sizable and brazen theft. The authors recommend reducing state and local cigarette taxes as a way to thwart smuggling and other unintended consequences. Details: Midland, MI: Mackinac Center for Public Policy, 2010. 40p. Source: Internet Resource: Accessed May 10, 2012 at: http://www.mackinac.org/archives/2010/2010-09TobaccoSmugglingFINALweb2.pdf Year: 2010 Country: United States URL: http://www.mackinac.org/archives/2010/2010-09TobaccoSmugglingFINALweb2.pdf Shelf Number: 125232 Keywords: Cigarette Smuggling (U.S.)Illicit TobaccoTax Revenues |
Author: Reed, Howard Title: Tobacco Taxation, Smuggling & Smoking in Ireland Summary: In 2011, the Irish Heart Foundation commissoned Landman Economics to assess the future impact of tax increases on smoking rates and the illicit trade in tobacco. The study shows that a €1 tax increase on a packet of 20 cigarettes would bring in €68 million in extra receipts and a further €28 million in indirect public finance benefits. Such an increase would also result in some 30,000 people quitting smoking in Ireland. Given that roughly one in two smokers ultimately die from the habit, this single action would help up to 15,000 people countrywide to live longer. In addition to a price increase, the report recommends: A Government commitment to a price escalator whereby tobacco taxes rise by a certain amount each year in future budgets (for example, 5 percent per year above inflation). Expenditure on anti-smuggling operations such as enforcement and supply chain control should be increased by around €8 million per year. This would match per capita spending in the UK where smuggling has been reduced from 21% to 12% despite regular tax increases above inflation. A similar reduction here would bring in around €130 million of extra revenue to the Exchequer per year. Details: Dublin: Irish Heart Foundation, 2011. 89p. Source: Internet Resource: Accessed July 23, 2013 at: http://www.irishheart.ie/media/pub/advocacy/Tobaccotaxationsmugglingandsmoking.pdf Year: 2011 Country: Ireland URL: http://www.irishheart.ie/media/pub/advocacy/Tobaccotaxationsmugglingandsmoking.pdf Shelf Number: 129488 Keywords: Cigarette Smuggling (Ireland)Illegal TradeIllicit TobaccoIllicit TradeTax Revenues |