In a recent study released by The Mackinac Center for Public Policy, researchers Michael LaFaive and Todd Nesbit concluded that in 2011, 29.3 percent of cigarettes smoked in Michigan were smuggled in.
This is a 12.7 percent increase from their previous study in 2009. Michigan remained ranked 10th in the nation for net import of smuggled cigarettes. New York holds the top spot with approximately 60 percent of consumed cigarettes being smuggled in and has the highest tax of $4.35 per pack. Since the 1950s, Michigan cigarette taxes have risen from five cents a pack to $2. To combat the tax raises, many area smokers have resorted to buying cigarettes across the border from states with a lesser taxes, such as Indiana, according to LaFaive and Nesbit.
While much of the smuggling is classified in the “casual” category for personal consumption, there is a great amount of commercial smuggling which led to an increase in criminal activity and violent crimes, according to the report. Many people, including law officers, have been killed in cigarette smuggling incidents, LaFaive said. There even have been police and prison guards involved in the smuggling business, LaFaive said.
Lawmakers believe that they are going to reduce the amount of smoking with higher taxes, he said.
“Too many politicians will point to a decline in cigarette sales in their states and say, ‘See, it’s working,’” LaFaive said. “But the consumption is not declining, people are simply getting their nicotine elsewhere. They are smuggling.”
It’s “prohibition by price” said LaFaive. There are strong parallels between this and Prohibition in 1920. The sale of “loosies”—individually sold cigarettes—to the single shots of whiskey men would sell outside factories during shift changes in the ’20s, compares, LaFaive said.
It can be a lucrative business. In the 1970s the Pentagon was embarrassed by the number of cigarettes sold to their airmen on Air Force bases, said LaFaive. The Pentagon didn’t realize airmen were buying and reselling. Even today, smokers do not necessarily need to cross borders to buy less expensive cigarettes. They can also go to a nearby Native American reservation or military base.
“While it’s definitely easier to be a casual smuggler in Kalamazoo or Hillsdale,” LaFaive said, “avenues exist whether you’re in the center of the state or not.”
The “substitution effect,” LaFaive said, is as real an issue now as it was during the Prohibition. Just as the substitute product was more potent and dangerous to health then, the hand-rolled cigarettes are more of a health hazard because people can decide not to use a filter.
Senior Josh Koczman started rolling his own cigarettes a few years ago and teaches others to do it as well.
“When I first started smoking, I smoked the Clove cigarettes and switched to American Spirits and then to Camels,” Koczman said. “And I eventually just realized it was much cheaper, and I like the taste better of the unfiltered, hand-rolled ones, so I switched to those.”
Junior Ethan Showler learned to roll cigarettes from Koczman and said he likes the aesthetic of rolling them himself.
“There is a little bit of control, you can roll them tighter or looser to give you a faster or shorter smoke,” Showler said. “It’s also really cheap and good quality tobacco. You’re talking 30 bucks for a tin that lasts you two or three weeks, so it’s like a fourth of the price [of cigarette packs.]”
Koczman said that he and his friends use to order Lucky Strike cigarettes by the carton from Ukraine online. They averaged approximately $2. He stopped ordering them abroad when Michigan stopped allowing imported cigarettes.
LaFaive said people are still importing them from foreign countries regardless of statutory changes. He holds to the opinion that lawmakers should establish a reasonable average cigarette tax for the Midwest to reduce the negative effects of high taxes.
“But politicians are as addicted to cigarette tax revenue as the people are addicted to nicotine,” he said.
LaFaive doesn’t know what it will take for lawmakers to cut back the taxes, but he said they will reach a point where something needs to happen.
“There is also a liberty question here. Thank you for caring about my health, but I’m adult. And people like risks in their lives,” he said. “I don’t like a sanctimonious finger pointed at me by politicians. It seems very nanny-ish.” tknopf@hillsdale.edu