Taxes and Illicit Trade
Taxation plays a key role in driving illicit trade. People respond to incentives, and sizable price markups for legal cigarettes create incentives for tax avoidance.
4 min read
Expert
Adam Hoffer
Director of Excise Tax Policy
Adam Hoffer is the Director of Excise Tax Policy at the Tax Foundation. Dr. Hoffer earned his PhD in Economics from West Virginia University and his undergraduate degree from Washington & Jefferson College.
Prior to joining the Tax Foundation, Dr. Hoffer was the Menard Family Associate Professor of Economics at the University of Wisconsin-La Crosse and the inaugural Director of the Menard Family Midwest Center for Economic Engagement and Research. Dr. Hoffer was also a Bradley Freedom Fellow with the Wisconsin Institute for Law & Liberty and a senior editor with the Center for Growth and Opportunity at Utah State University.
Dr. Hoffer published 30 peer-reviewed academic journal articles and he is the lead author and editor of two books: For Your Own Good: Taxes, Paternalism, and Fiscal Discrimination in the Twenty-First Century and Regulation and Economic Opportunity: Blueprints for Reform.
He lives in La Crosse, Wisconsin with his wife and two children.
Latest Work
Diesel and Gas Taxes in Europe, 2023
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Beer Taxes by State, 2023
Taxes are the single most expensive ingredient in beer, costing more than the labor and raw materials combined.
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Distilled Spirits Taxes by State, 2023
Of all alcoholic beverages subject to taxation, stiff drinks—and all distilled spirits—face the stiffest tax rates. Like many excise taxes, the treatment of distilled spirits varies widely across the states.
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Compare Tobacco Tax Data in Your State
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How Stable is Cigarette Tax Revenue?
This web tool allows taxpayers to see how cigarette tax revenues have changed since 1955. Across almost all states, a clear pattern of volatility emerges. Tax rate hikes are met with a momentary bump in revenue, followed by a falloff.
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How to Unlock Global Growth: The Role of Taxation
Our recent policy conference brought together academics and political leaders to present research on some of the most pressing issues in global tax policy and to discuss solutions that can unlock genuine global growth.
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Recreational Marijuana Taxes by State, 2023
Recreational marijuana taxation is one of the hottest policy issues in the U.S. Currently, 21 states have implemented legislation to legalize and tax recreational marijuana sales.
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Global Excise Tax Application and Trends
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Shrinking Revenue from Sin Taxes: A Small Price to Pay for Healthier Behaviour
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Vermont Tobacco Flavor Ban Would Cost Nearly $16 Million Per Year
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California Flavored Tobacco Ban May Cost More than $300 Million in First Year
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New York’s Proposed Cigarette Tax Hike and Flavor Ban Will Fuel Illicit Markets and Decrease Revenue
Earlier this month, New York Governor Kathy Hochul (D) proposed increasing the state’s cigarette tax rate by $1.00 a pack, banning the sale of flavored vaping products, and ceasing the sale of all flavored tobacco products. If enacted, these policies would fuel black markets and create a fiscal hole for the state to fill, all while hurting New York businesses and consumers.
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State Tax Changes Taking Effect January 1, 2023
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Excise Taxes and Fees on Wireless Services Increase Again in 2022
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Cigarette Taxes and Cigarette Smuggling by State, 2020
People respond to incentives. As tax rates increase or products are banned from sale, consumers and producers search for ways around these penalties and restrictions.
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The Future of Tobacco Taxation in Europe
Later this week, the European Union is expected to release a new Tobacco Tax Directive, the first update in more than a decade. Early reports indicate that the EU will propose a significant increase to the existing minimum cigarette tax rates levied across the Union and expand the product categories that are taxed, including a block-wide vaping tax.
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Recreational Marijuana Taxes by State, 2022
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Cannabis Taxes Back on the Ballot in 2022
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State Tax Ballot Measures to Watch on Election Day 2022
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