New York City continues to build upon its reputation as the most tobacco-unfriendly city in America.
A pack of cigarettes in New York City will now cost $13 a pack under a “minimum price law” passed by the city council.
In addition, the council banned cigarette sales in all pharmacies and will cut the number of licenses for businesses to sell tobacco (mostly through attrition).
The banning of sales in pharmacies is a great idea, I think. San Francisco already did this and the pharmacy chain CVS banned cigarette sales. Meanwhile, other pharmacy chains like Walgreens are being lobbied to stop cigarette sales.
New York City also has among the highest cigarette tax in the nation — about $5.85 a pack … just for taxes.
New York already has a pretty low smoking rate — out of more than 7 million people, roughly 900,000 are smokers, about 12 percent, lower than the national average of about 16 percent.
I have mixed feelings about the $13 a pack law because I think by jacking up the price of cigarettes THAT high, two things will happen … it will encourage some people to quit but it will also add to what is already a major cigarette smuggling problem on the East Coast.
Virginia, only about a four-hour drive from New York City, has some of the lowest cigarette taxes in the nation at 30 cents a pack. So a pack of cigarettes in Virginia is already $5 a pack cheaper than New York City, even before this new law takes effect.
This inequity in tobacco taxes has created a huge cigarette smuggling businesses on the East Coast (North Carolina is also 45 cents a pack). It’s estimated that it’s a $15 billion a year industry. So, I fear that jacking up the price that much is just going to do that much more to create a black market for cigarettes.
And of course, if I was a pack a day smoker living in New York City, it would be worth it frankly to make a day trip to Virginia three or four times a year and buy a bunch of cartons of cigarettes. An average pack of cigarettes in Virginia is $5.50 — you’d be saving $7.50 a pack by going to Virginia. A carton is probably about $70 cheaper. Buy 10 cartons of cigarettes you’d have a stock of cigarettes to last over three months and you’d be saving as much as $700!
Honestly, I don’t see a thing stopping people from doing that.
I believe at a certain point, jacking up cigarette taxes reaches a plateau of diminishing returns. Yes, cigarette taxes should be higher in a lot of states, Virginia’s tax is insanely low, but jack it up too high, you encourage people to drive out to the nearest Indian reservation to buy smokes .. or Virginia. I think $2 a pack is a reasonable tax.
And Jesus, states need to get together to even out the inequity in their cigarette taxes, especially on the East Coast. Or the smuggling business is going to continue to thrive.