New York is learning a lesson in economics — the more you tax something, the less you get. Smokers are bypassing New York to buy cigarettes in other states where the tax is lower. (emphasis is mine)
New York state sold 28.7 million cigarette tax stamps in July, down from 43.1 million the previous year, said a spokesman for the state Department of Taxation and Finance.
That translates to $125 million in cig-tax revenue last month, barely more than the $119 million haul in July 2009 despite the massive tax hike.
The numbers confirm reports from convenience-store owners that cigarette sales have dropped 25 to 35 percent since the state hit smokers with a $1.60-a-pack increase.Retailers said sales were off by as much as 45 percent in stores bordering low-tax states like Pennsylvania and Vermont and tax-free Indian reservations in western New York and on Long Island.
In June, the Legislature approved Paterson’s plan to raise the state tax on cigarettes 58 percent as part of a breathtaking $290 million levy on tobacco products meant to save the teetering state treasury.
The hike raises the average price of a pack of Marlboros to $11.60 in New York City, compared to $5.93 in Matamoras.
