Up in Smoke

New York is the cigarette smuggling capital of the United States, but how much is your habit costing the State?

Ivan Flores, Adam Muro

If you smoke and live in New York City, you’re probably aware that a pack of cigarettes costs less at some places than at others.

You may have stumbled into a bodega in your neighborhood, and been pleasantly surprised that the price of a pack off cigarettes was $8 or $9 dollars instead of $14 or $15.

You also may have noticed the Virginia tax stamp on that cheap pack of cigarettes. A 2017 study produced by the Tax Foundation, an independent tax policy think tank based in Washington, D.C., found that New York was the cigarette smuggling capital of the United States.

Chart courtesy of The Tax Foundation

Another study estimates that around 60% of all cigarettes sold in New York City have been smuggled in illegally from other states. This translates into millions in lost revenue for the state and city.

A pack of open cigarettes. Ivan Flores.

New York State has the highest excise tax on tobacco in the nation at $4.35 a pack. Add an additional $1.50 onto that if you’re purchasing a pack in New York City. Compare this to a state like Virginia, where a large percentage of the cigarettes smuggled into New York come from, where the excise tax is a mere $0.35 a pack, and you start to see why there is a vibrant black market for tobacco.

But what is the loss for New York’s tax revenue when one smoker buys a few packs of illegal cigarettes a week? What about the revenue gain for Virginia?

Use the calculator below to find out, and read to the bottom to learn the impact over the course of a year.

How much do you smoke?

Total Cost (NY Taxed)

New York States Makes

Total Cost (Smuggled Smokes)

VA makes

A pack of Marlboro cigarettes that was smuggled from Virginia and sold at a bodega in New York. Photo by Ivan Flores

James Gazzale, a spokesperson for the New York State Department of Taxation and Finance, said that the agency worked with law enforcement to remove $6.6 million in untaxed cigarettes from the streets of New York in 2017 alone.

He also said that last year, they partnered with the New York State Gaming Commission and agencies in other states to let retailers know that if they’re caught selling untaxed cigarettes, their lottery and alcohol sales privileges could be revoked as well.

“We have partners everywhere,” he said. “It’s a coordinated effort from the Feds on down to local law enforcement.”

NY Loses

VA Gains

Losses by state and calculated per year

New York City Mayor Bill de Blasio also helped introduced a package of seven bills to City Council last summer that aim to curb smoking in New York City with measures like banning pharmacies from selling tobacco and limiting retail licenses.

He also wants to raise the minimum price for a pack of cigarettes in New York City even higher, from it’s current pre-tax price of $10.50 to a whopping $13. Scott Drenkard, who helped produce the Tax Foundation’s studies on cigarette smuggling, isn’t convinced this will help the problem.

“This is a delicate balance between trying to balance a public health goal with trying to confront the laws of economics,” he said. "The same product can't sell for two differnt prices in two different locations."

Drenkard explained that as long as the difference in excise taxes between New York and Virginia remains this drastically different, the illegal cigarette trade will continue to flourish.

A Brooklyn bodega manager who wanted to be identified only as Yasser, sells packs of cigarettes smuggled in from Virginia for $9. For him it's a no brainer. “Otherwise the minimum price is $15, $16,” he said, “it brings in the customers.

Jones lights up a cigarette that was brought in from Virginia and sold at a local bodega. Photo by Ivan Flores

Jones, a 25 year old graduate stucent at Columbia University, buys smuggled cigarettes regularly and doesn't think twice. "When you take the closest thing I have to therapy and make it prohibitively expensive," he said, "fuck your taxes I'm gonna do what I gotta do to make it through the day"

The market for Yasser's ilicit merchandise is clealy there, but he did acknowledge that he is taking a big risk. Stores caught selling untaxed cigarettes faces steep penalties, around $600 per carton plus the excise tax, and repeat offenders can have their tobacco licenses pulled all together. “If they catch [you with] the cigarettes, it’s a big problem,” he said.