In today's NY Daily News the paper reports on the proliferation of illegal cigarette sales in many of the city's poorest neighborhoods. The story's focus is on the fact that buttlegging is a threat to the health of the folks in these areas because it prevents the deterrent effect of the cigarette tax from operating effectively. As the paper's headline points out, "Illegal Market Blackens Lungs."
AS the News points out, the steep tax increase on tobacco products, an 1800% record hike for this city, was "aimed at convincing New Yorkers that tobacco is bad form their health." Yet the fact that a pack of black market smokes on the street can cost one or two dollars less than in a store makes it easier to purchase and avoid the health/cost dilemma.
How much do these street sales impact the cigarette market? It is, of course hard to say exactly since the sales are, well, illegal. The News, however, goes on to say that, "After the city hiked its cigarette tax from 8 cents to $1.50 per pack in 2002, the number of New Yorkers getting their street fix through street hawkers rose from 6% to 9%, city health officials said."
Really? How does any "city health official" know anything about the black market in cigarettes? What we do know is that the city's 2202 hike is taking $250 million a year from the bodegas, newsstands, green grocers and delis of NYC. That's over 50% of the legitimate sales. So who exactly is the moron who came up with the 6-9% estimate?
Well maybe it was the commissioner, who commented to the News that, "'Taxing cigarettes is the single most effective way to reduce tobacco use...Small and even modest amounts of evasion don't change that one bit.'" We're not quite sure what the distinction is between "small" and "modest," but we do know that a greater than 50% reduction in legal sales every year is not a small thing to the store owners who are suffering the loss of business.
Which is not really surprising since, when the mayor was asked about the severe loss off business from the cigarette tax, he characterized it as "a minor economic issue." What is comforting is the fact that city officials "have doubled their retail inspections to 60 a month..." Just what we have come to expect: when legitimate store owners are being victimized by illegal street sales, the city comes to their aid by-ratcheting up inspections on these very same retail businesses. Way to go Mayor Mike!