Educated NY smokers dodge cigarette taxes
NEW YORK, Oct 19 (Reuters) – New York City’s smokers dodged as much as $43 million of cigarette taxes last year, and the worst offenders were “the more highly educated,” a new report said on Friday.
Another $105 million was siphoned off by New York state, because in 2002 it required the city to give up 46 percent of all of its cigarette tax revenues in return for agreeing to let New York City hike the tax to $1.50 a pack.
That increase was one of Mayor Michael Bloomberg’s first anti-smoking measures; he also made headlines by banning smoking in bars and restaurants.
New York City smokers pay one of the highest cigarette tax rates in the nation, a total of $3.00 a pack, because the state matched the city’s tax increase.
Even so, the rest of the state surpassed city folks when it came to ducking the tax.
Only 27 percent of city smokers said they bought no-tax or low-taxed cigarettes in a 2006 state survey, according to new report by the Independent Budget Office. In contrast, some 34 percent of other state residents said they got “under-taxed” smokes via the Internet or Indian reservations.
The tax-dodging divide was even more vivid when city dwellers were compared based on their education. “Twenty percent of smokers without high school diplomas reported evading cigarette taxes, compared with more than 60 percent for those with college degrees,” the report said.
The worst offenders lived in the borough of Queens, added the report by the Independent Budget Office, which mirrors the Congressional Budget Office but on a local level.
An Independent Budget Office spokesman was not immediately available to explain why Queens might have the most tax-avoiders, though these residents tend to rely more on cars for transportation than in any other borough except Staten Island, and thus might have more choices.
While the state this year rejected Bloomberg’s bid for another 50-cent-per-pack hike, the report noted more increases might drive more smokers to buy “under-taxed” cigarettes.
“There is considerable evidence that supports the mayor’s enthusiasm: increases in cigarette excise taxes result in reduced rates of smoking among adults and by an even greater margin among youth,” the report said.
But it concluded: “The availability of under-taxed and therefore cheaper cigarettes undermines the city’s efforts to reduce smoking and deprives the city of funds that would be otherwise directed towards public health initiatives.”
The extra tax dollars the state gets help pay for health care, the report noted.
Local prosecutors have gone after smokers who ducked taxes by buying cigarettes over the Internet, for example. The report did not examine this possible deterrent though it noted city residents with more than two cartons of untaxed cigarettes must pay the equivalent of the regular cigarette tax.
Originally written By Joan Gralla
