Thursday, November 11, 2010

Massive NY Cigarette Tax Hike Causes Tax Shortfall

This should have been obvious, but somehow it wasn't. New York hiked cigarette taxes a whopping 58% earlier this year. A pack of Marlboro now costs $11.60 in NYC. Suddenly cigarette sales dropped 27% in New York. They are up over 40 percent in nearby states and Indian reservations.

The NY Post reported:
Sales of taxed cigarettes have plummeted a staggering 27 percent statewide since the highest cigarette tax in the nation took hold in July, a Post analysis has found...

"That's what we warned would happen, and obviously it has come to fruition," said James Calvin, of the New York Association of Convenience Stores.

"Every tax increase drives more smokers to that dark, shadowy, unregulated, unlicensed, untaxed side of the street. The whole policy is self-defeating."

If the trend continues, the state could fall far short of the $260 million windfall Paterson expected from the 58 percent tax hike.

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