Inversions have been in the news consistently this summer as multiple companies have looked for legal paths away from the U.S. corporate tax system. Burger King became the latest corporation to add to the list after they...
- The Tax Policy Blog
- UPS Decision Unlikely to Stop Cigarette Smuggling
UPS Decision Unlikely to Stop Cigarette Smuggling
In an effort to curb illegal cigarette sales, New York Attorney General Eliot Spitzer has compelled UPS to stop shipping smokes to U.S. consumers. From Reuters:
United Parcel Service Inc. on Monday said it will stop delivering cigarettes to consumers in the United States in an agreement aimed at reducing Internet access to cigarettes by underage smokers…
Law enforcement officials argue that selling cigarettes over the Internet leads to violations of state laws involving age-verification of buyers and also avoids the payment of taxes.
While this agreement may have been motivated partly by concern for kids’ access to cigarettes, it is clearly also motivated by tax. States have been rapidly losing cigarette tax revenue in recent years as the Internet has reduced the cost of smuggling and tax evasion.
Unfortunately, it’s unlikely that this arrangement will do much to cut cigarette smuggling. Why? It doesn’t address the root cause, which is high excise taxes. Today, New York has a cigarette tax rate of $1.50 per pack. Even without UPS, it’s likely that the chronic cigarette smuggling that plagues America’s big cities will continue.
Subscribe to the Tax Foundation Newsletter
Join the Tax Foundation's fight for sound tax policy Go
About the Tax Policy Blog
The Tax Policy Blog is the official weblog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.