July 1, 2010, a new cigarette tax hike took effect in New York and just after a few weeks it looks like it is proving to be more troublesome than politicians thought. Now with smokers crossing state lines to pick up smokes and illegal smuggling operations it looks as if they are weighting their options.
New Jersey shops and other surrounding states have already begun stocking up on smokes, since New Yorkers will come in and buy them by the carton. Shop owners are saying “during the last New York hike business went up 20 percent to 30 percent. For the price of one pack of cigarettes in New York, smokers can sometimes buy two packs there.
Now, New York has to come to terms with what happens if smokers continue to respond to the hike by buying cigarettes in less heavily-taxed states, the hike that they are using to fill their 300 million dollar deficit could fail to deliver—leaving the state still in a large financial issue which is exactly what happened several years ago in the state of New Jersey.
Tags: Chris Christie, cigarette smuggling, cigarettes, cross border sales, cross border shopping, David Paterson, elastic demand, excise taxes, inelastic demand, New Jersey, New York, politics, tax hikes, taxes