Photo: jdn via flickr
New York taxes $4.35 on top of every pack of cigarettes.Virginia taxes only 30 cents.
This presents an enormous, albeit illegal, arbitrage opportunity for street vendors (via Kid Dynamite).
Since Governor Paterson’s cigarette tax hike last summer, the local black market has been on fire, according to the NYT’s Joseph Goldstein.
Lonnie Warner, aka Lonnie Loosie, said he’s selling 10 times as many cigarettes as last year:
Mr. Warner said he bought his cigarettes — almost always Newports — for a bit over $50 a carton from smugglers who get them in states like Virginia, where the state tax is well under a dollar a pack. He then resells them for 75 cents each, two for $1 or $8 for a pack ($7 for friends).
Mr. Warner said he and each of his two partners took home $120 to $150 a day, profit made from selling about 2,000 cigarettes, mostly two at a time. Each transaction is a misdemeanour offence.
Still, the state calls the cigarette tax a success and says it’s getting more revenue from fewer users.
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