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Cigarette Smuggling in WA

A press release from the ATF talks about cigarette smuggling as an emerging problem, and in Washington, our cigarette taxes create a situation where smuggling is attractive.

Back in April, the ATF outlined how the black market in cigarettes works, to the tune of an estimated nationwide loss of $5 billion in tax revenue. Some smugglers trade firearms and drugs for tobacco products that are cheaper overseas, some just smuggle from one state into another, when price differentials make it profitable. The smokes may even be stolen from legitimate suppliers and enter the illegal trade, which, according to the ATF, is well organized and even “services” routes of retail outlets.

One investigation in 2009 nabbed smugglers in Northern Virginia. After more than a year’s investigation, they arrested 14 people. The ring had traded more than $8 million, nearly 40 firearms, and drugs in a trade for 388,000 cartons of smokes. The ATF said the cigarettes were bound for retail stores in New York.

According to one watchdog group, the low cigarette taxes in neighboring states makes it attractive to smuggle cigarettes into Washington. Our state tax is $3.02 a pack, with Oregon at $1.18 and Idaho at just 57 cents. That may not sound like much, but it works out to $20 or more profit per carton of cigarettes. By buying legal cigarettes in one state and shipping them here, a truck-full can pay off in thousands of dollars.

Loses for 2012, according to our Department of Revenue, were $376 million on unpaid taxes alone. Add in the possibility of getting even better prices by buying cigarettes pre-taxed and there is a strong incentive to smuggle. An estimated 35 percent of the cigarettes in Washington are contraband.

Smugglers may also be attracted to cigarettes simply because they are not seen as serious criminal offenses – at least not compared to dealing in illegal drugs. Penalties are lower and police may not investigate cigarette smuggling as intensely as drug dealing.

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