Illegal Tobacco Products Cost New York $20M a Month

FOR IMMEDIATE RELEASE
New YORK ,New Jersey, Connecticut, New York, United States of America (Free-Press-Release.com) January 20, 2011 -- The illicit tobacco market is extending very fast on the morrow of tax hikes which make New York tobacco products the most expensive in the nation.

Illicit tobacco products are coming into neighborhood bodegas from neighboring Indian reservations and even from China. According to governmental officials New York state is smoked out of $20 million a month from all these illicit tobacco products purchases.

“These are unpleasant consequences of the taxes, creating illicit market,” stated Ron Turk, spokesman of the Bureau of Alcohol, Tobacco and Firearms’ (ATF) New York field office.

Sales of taxed tobacco products have fallen abruptly by 27% since June, when government officials increased the excise duty to $4.35 a package of the city’s tax of $1.50, thus making the mean price of Marlboros $11.60.

Approximately 30 million packages are sold legally each month, less than 41 million packages a month before June. This fall exceeds all predictions of tobacco-control experts, who stated that sales would fall 8 to 10%, showing that smokers are finding other means to their cigarettes.

A half of all tobacco products consumed in the state do not have appropriate tax stamp. Law enforcement authorities are worried that fast buck will increase rivalries among criminal bands, the same situation as with drugs. “We are facing a lot of violence in drug trafficking, the same might happen in tobacco field. As volumes and money increase, the stakes get higher,” Turk said.

State officials believe that tax is worth it as a motive for people to stop smoking, and the higher tariff makes up losses for the illegal trafficking. Tobacco taxes produced a $139 million profit in October of this year in comparison with the $108 million in October 2009.

While many smokers profit of tax havens on Indian reservations, the majority of New Yorkers just should go corner deli. “Some small retailers found it difficult to vie with tax-free opponents due to their dependence on tobacco products to drive retail traffic. They have created the so called atmosphere of despair,” a tax-policy observer stated.

Besides of buying the illicit tobacco products out of state, officials are reporting a worrying increase in contraband cigarettes being imported from overseas and mainly from China.

Also grows the trend of falsifying tax stamps in order to make the counterfeit cigarettes look as legal.

One of the ATF’s major local arrests took place in Brooklyn in 2007, when eight men were arrested for importing counterfeit cigarettes and confiscated 500,000 cases of cigarettes and $500,000 in cash.

On the nation-wide level, more than 50 law enforcement officer appointed to the New York State Department of Taxation continue to execute police raids of local bodega owners.

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