Cigarette packs littering NYC streets tell story of taxes going up in smoke

Paying $6.85 in state and city taxes on a pack of cigarettes? Fuhgeddaboudit.

Cigarettes sold legally in New York City are among the highest taxed in the United States. But a Rutgers University study found that most of the discarded cigarette packs researchers collected throughout the city were brought in from states with much lower taxes on the product.

Of 252 discarded cigarette packs found on the streets across the five boroughs, just 17% had the proper New York City tax stamp — down from 39.3% in 2011 and 23.7% in 2015 when other teams did similar experiments, according to the study.

“It’s arbitrage,” Kevin Schroth, a researcher at Rutgers University's Institute for Nicotine and Tobacco Studies and lead author of the study, said in an announcement from the school. “If something is cheaper in one place and more expensive in another, people will find ways to profit by purchasing in the cheap place and selling in the expensive one.”

The findings come as smoking rates plummet. According to the city’s health department, the prevalence of smoking halved from 22% in 2002 to 11% in 2020. In 2023, that number dropped below 10% to 8.4% for the first time, according to the state department.

“This might mean that part of a shrinking smoking population is very determined to get cheap, untaxed cigarettes,” Schroth said.

Researchers noted the study's limitations, including uncertainty about whether littered packs are representative of all packs smoked in New York City, or if people who litter are more likely to have bought untaxed cigarettes. But they noted the comparison to previous similar studies still provides insight into the changing patterns in cigarette tax compliance.

The illicit cigarettes are often sold at the same stores as legal ones, hidden away in compartments until a customer uses code phrases like “special price” to signal they’re interested in the tax-free ones, according to Schroth. He previously worked with New York City's health department on cigarette tax enforcement.

The study also described cigarette trafficking patterns. Georgia, where the tax is 37 cents, was the primary source of illicit cigarettes making up 27.8% of the littered packs. Virginia, where the tax is 60 cents, made up for 20.6%. That means smugglers and their customers are able to split more than $6 in savings, according to researchers.

In an emailed statement, the city's sheriff’s office said it conducts tobacco inspections on a regular basis throughout the city, seizing illegal or unlicensed tobacco products, issuing violations and making arrests where appropriate.