Steve Balich Editors note: People will always try to get the best price. Government thinks selling things with a high tax is the answer to the revenue problem despite our human nature to get the best deal.
The taxes on marijuana will also help the Black Market flurish. People can drive to Indiana fill up with cheaper gas and buy cheaper cigarettes. People who use marijuana products will go to the best price, since it is legal anywhere in Illinois and you can’t tell the difference between legal and illegal marijuana.
Report says Illinois’ cigarette smuggling problem getting worse
- By Cole Lauterbach | The Center Square
- #twill #blackmarket #cigarettes #sbalich #taxes #Illinois #profit
Nearly 20 percent of the cigarettes smoked in Illinois were purchased outside of the state.
That’s the estimate from the nonprofit Tax Foundation. In conjunction with the Mackinac Center, the group tabulated the smoking rate in each state, estimated how much residents smoked on average and compared the estimated tax revenue against what states actually collect.
The gap, or surplus, is what the foundation attributed to cigarette smuggling.
“The crafting of tax policy can never be divorced from an understanding of the law of unintended consequences, but it is too often disregarded or misunderstood in political debate, and sometimes policies, however well-intentioned, have unintended consequences that outweigh their benefits,” the report said.
In Illinois, the report estimated that 17.2 percent of all cigarettes consumed were brought into the state from elsewhere.
The Illinois Department of Revenue reported more than $63 million in taxes collected in November from cigarette stamps, or the record of sale origin located on the packs.
“Oftentimes, you’ll have high-tax states next to low-tax states and those high-tax states will see significant inflow,” Tax Foundation analyst Ulrik Boesen said.
The most common origin, Boesen said, was Indiana and Missouri. Those two states have collected more in tax revenue from cigarette sales than people who smoke, an indication of thriving smuggling industries.
“For the Midwest, Indiana, Missouri … Illinois smokers will often look to those two states,” he said.
Tobacco shops often strategically place themselves to take advantage of the lopsided tax burden. In Missouri, for example, a chain of stores called Dirt Cheap has four locations placed just off of a major bridge that crosses the Mississippi River into Illinois.
Cook County has the highest compiled tax burden on cigarettes in the country. Boesen estimated that the vast amount of cigarettes were smuggled into the county from Indiana, which sees 19 percent more in excise revenue than residents were estimated to consume.
In July, Illinois increased its sales tax on cigarettes by $1 per pack. Boesen said he expected smuggling to become more popular as a result.
“Unless the other low-excise tax states increase dramatically to close that gap, the inflow into Illinois will just get worse,” he said.
The smuggling problem is most pronounced in New York, where the foundation estimated more than half of the cigarettes smoked came from outside of the state.
The penalty for smuggling cigarettes in Illinois is $15 per pack up to 100 packs and $25 per pack for someone caught with more than 100 packs, or ten cartons. The practice of selling “loosies” or single cigarettes carries a $1,000 penalty for the first offense and $3,000 for a second offense. Those caught could be charged with a class 4 felony.
