"Over the last decade, states and the District of Columbia have aggressively pushed to increase cigarette taxes -- collectively hiking them 100 separate times. Today, more than half the retail price of a pack of cigarettes is composed of taxes and other fees, and last year, cigarettes generated more than $16.8 billion for state governments, according to the U.S. Census Bureau. That aggressive push has had an unintended consequence: It’s made the cigarette market very attractive to smugglers and bootleggers.
The intent behind cigarette taxes has always been to discourage an unhealthy habit that increases health-care costs while generating revenue in a way that is politically palatable to most voters. But all those cigarette taxes give criminals extra incentives: They make money if they can get away with selling cigarettes sans the state fees. Estimates of just how much cigarette tax evasion costs states are hard to come by, though the Government Accountability Office is expected to take a stab at the number later this year. California has previously pegged the cost of cigarette tax evasion to the state at $182 million annually, plus another $94 million for other tobacco products"...............READ MORE
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