Michigan’s Rate of Cigarette Smuggling Among Worst in U.S.
High taxes on cigarettes have led to smokers, retailers and organized groups purchasing cigarettes in states with lower taxes to save money.
Michigan's problem with cigarette smuggling is among the worst in the nation.
Mackinac Center for Public Policy released their annual report on cigarette tax evasion which compares several measures across all 50 U.S. states in 2016. Michigan ranks near the top in several categories.
- 22 percent of cigarettes smoked in Michigan are illegally smuggled in.
- In 2016, cigarette smuggling cost Michigan $252 million. Michigan's lost revenue ranked sixth-highest in the nation.
- Michigan ranked fifth in total number of packs smuggled.
It's easy to make the connection between high taxes on cigarettes and high rates of cigarette smuggling to avoid those taxes.
After Nevada increased its cigarette taxes from $0.80 per pack to $1.80 per pack, it jumped 35 places in the rankings to become the sixth highest smuggling state.
New York remained the state with the highest rate of smuggling. 56 percent of all cigarettes consumed in New York are smuggled in. New York's tax of $4.35 per pack is tied for the highest in the nation.
Michigan's state tax is $2.00 per pack.
It's possible that lower taxes could create more revenue for Michigan by increasing the number of cigarettes purchased in Michigan, but for many that's not the point. High taxes are used as a means to discourage smoking and decrease smoking rates.
Should Michigan change its state tax on cigarettes?