Illegal Cigs & Booze Costs NYS $1.6B in Annual Tax Revenue

Illegal smuggling of cigarettes and liquor from other states deprives New York State of over $1.6 billion in annual tax revenue, according to an article in Crain’s New York. Currently, 25% of liquor purchased in NY stores is likely contraband. Of cigarettes sold in the five boroughs, a whopping 50% is estimated to be smuggled. The illicit enterprise, depriving New York of tens of millions of dollars in tax revenue, is a logical consequence of NY’s high excise taxes and limited staff and resources for enforcement. Two years ago, the Department of Finance did create a “strike force” targeting smugglers, headed by Sherriff Joseph Fucito and employing 150 deputies and detectives.

As a result, in 2015 arrests for alcohol and cigarette/tobacco smuggling doubled to 133. Still, the department admitted it didn’t have the resources to inspect a fraction of the stores and vendors selling cigarettes. “The truth is we have our hands full,” said Sherriff Fucito, adding that “typically the crime gets treated as a tax offense, and most people pay a fine.” First Deputy Sheriff, Maureen Kokeas, agreed that the likely fine imposed in most cases is not a substantial deterrent saying “Getting caught is seen as a cost of doing business.”