NY PostState launching task force to stop cigarette smuggling, tax evasion
By Pat Bailey
March 31, 2014 | 3:26am
ALBANY — Gov. Cuomo is out to kick cigarette smugglers in the butt.
In an effort to crack down on the sale of illegal smokes in New York, Cuomo is set to announce Monday a 13-agency task force dedicated to keeping illegal cigarettes out of the state.
“This new law-enforcement strategy will help to crack down on these illegal cigarette sales and capture those smugglers who seek to evade the law and rob the state of the revenue it is rightly owed,” Cuomo said.
A recent study by the Tax Foundation revealed that almost 57 percent of cigarettes smoked in New York were bought into the state illegally, the highest of any state. That was a 20 percent increase from the previous study, conducted in 2006.
New York state has the highest cigarette-tax rate in the country, making trafficking a profitable and attractive enterprise.
New Yorkers burn a hefty $4.35 per pack in taxes — and those who light up in the Big Apple are slapped with an additional $1.50 tax per pack.
In comparison, Missouri, has h the lowest cigarette tax, at only 17 cents per pack, according to the study.
“Public policies often have unintended consequences that outweigh their benefits,” Tax Foundation Economist Scott Drenkard said in the report.
A 2012 study by the Virginia State Crime Commission gave an example in which smugglers could profit an estimated $4 million on 800 cases when first buying the cigarettes in a low-tax state like Virginia and then selling them in New York City, according to the Tax Foundation’s study.
Virginia’s cigarette tax is just 30 cents a pack.
In 2013, two men were sent to prison for trying to smuggle more than 1 million unstamped cartons from Virginia into New York City and the Albany region.
The profit margin on smuggled cartons is higher than that on the sale of illegal drugs such as cocaine, heroin and marijuana, the study showed.
There are fines and penalties already in place to try to prevent such actions that end up robbing the state’s coffers of sales tax.
Penalties for selling illegal cigarettes can include a $600-per-carton fine and possible criminal charges. But the enforcement has been lax.
The Tax Foundation’s study suggests some enforcement officials “turn a blind eye” to illegal shipments.
The new task force will include federal, state, and county agencies and will be headed by former NYPD Detective Michael Spinosa.
Spinosa, who is currently with the state Tax Department’s Criminal Investigations Division, has already seized smuggled cigarettes in 18 different cases, Cuomo said.