SEATTLE (CBS SEATTLE) – Nearly 40 percent of cigarettes consumed in Washington state are contraband, coming from foreign countries and avoiding state taxes.
A nationwide study by think tank Mackinac Center for Public Policy studied cigarette smoking in nearly all 50 states, according to KING-TV. The study found that 36 percent of all cigarettes consumed in Washington are contraband, and reveals for the first time that four-in-ten cigarettes consumed in Washington are actually illicit.
“The bottom line here is that many governments are making tobacco products as valuable as illicit narcotics,” Mackinac’s Michael LaFaive told KING.
The ATF said the cigarettes were manufactured by Phillip Morris in Vietnam, where they were purchased. The cigarettes were then mailed to people in the U.S., who illegally sold the cigarettes for $7 to $9 per carton. Normally, cigarettes sell for about $80 a carton, according to the ATF’s statement.
Raids were conducted in Seattle, Tacoma, Shoreline, Kenmore and Kent.
Contraband cigarettes are those for which Washington’s $3.02 per pack state tax have not been paid. In 2010, as the financial crisis mounted, Washington state increased its cigarette tax by a dollar a pack to the fourth highest state tax in the nation.
The Washington Department of Revenue is about to release its own study of cigarette tax evasion.
Spokesman Mike Gowrylow tells KING he doesn’t expect the state’s figures to be as high as Mackinac’s. He expects it will put the number of contraband cigarettes at about one in three.
By the state’s estimate, illicit cigarettes cost Washington taxpayers a staggering amount of money. In the state’s last estimate in 2011, 94,000,000 packs of contraband cigarettes were consumed. At $3.02 per pack, that’s a tax loss of $284,000,000 per year.
Washington law requires that all cigarettes packs consumed in Washington bear a Washington tax stamp – proof that the tax has been paid.
Officials say it’s hard to gauge how much of the smuggling that produces contraband cigarettes is from criminal organizations and how much is what is called “casual smuggling.”
Casual smugglers are people who buy their cigarettes out of the state, where the tax is cheaper, for their own personal use. Idaho and Oregon both have much lower cigarette taxes than Washington.