About 40 percent of cigarettes in New Jersey are smuggled into the state, according to a recent state Treasury Department report. And the figure hardly seems surprising, given that New Jersey levels a $2.70 tax on each pack of cigarettes sold. The high tax has created not only a significant black market for cigarettes in the state, but has also resulted in smokers purchasing their cigarettes out of state either via the Internet or by driving across state lines.
While New Jersey officials try to determine a way to combat not only the smuggling but the loss of more than $500 million in uncollected tax revenue each year, it s clear that increasing the tax rate is not the answer. State Treasury Department tax specialist Eric Friedman remarked in his report that such a move would only produce fewer legal, and more illegal, sales of cigarettes.
If nothing else, New Jersey s burgeoning cigarette black market offers an object lesson. New Jersey s problem speaks to ACSH s point of view on the problems that would result if the FDA were to ban menthol cigarettes, ACSH s Dr. Gilbert Ross observes. Such a measure has been recommended by some health experts because of the greater appeal of mentholated cigarettes to particular demographics. However, ACSH has consistently maintained that a ban on this type of cigarette would only be more harmful in the long run, since it would most likely result in a large black market that would have the unintended effect of making cigarettes more readily available to young people.
These are just regular cigarettes, Dr. Ross says of the New Jersey smuggling. Can you imagine what would happen if mentholated cigarettes were banned?