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More than a quarter of the cigarettes smoked in Utah 26.8 percent are smuggled in because tobacco taxes here are so much higher than in neighboring states.
Studies released this week by the Tax Foundation and the Mackinac Center for Public Policy, a Michigan think tank, say Utah ranked No. 8 among all states for inbound cigarette smuggling in 2014, the most recent year for which data are available.
A major factor fueling smuggling is "how high your cigarette tax is compared to your immediate neighbors," said Scott Drenkard, a co-author of the studies and director of state projects for the Tax Foundation.
In 2014, the state cigarette tax in Utah was $1.70 a pack, the same as it is now. It was 57 cents in Idaho, 60 cents in Wyoming and 80 cents in Nevada (which has since been raised to $1.80).
"From Salt Lake City, it's relatively easy to get to Wyoming, Nevada or Idaho," Drenkard said.
Utahns buying cheap cigarettes directly from those states or commercial operations trying to smuggle them to resell may have helped Idaho rank No. 2 nationally for outbound smuggling; Wyoming ranked No. 5.
Just under 25 percent of all cigarettes sold in Idaho were smuggled outside of the state, the studies say, as were 21 percent of those sold in Wyoming and 17 percent of cigarettes purchased in Nevada.
The amount of smuggling was estimated by comparing the reported rates of smoking in every state with the reported legal cigarette sales there. The difference was assumed to be smuggling, either in or out of a state.
"Some of this is organized movement of products and can rightly be thought of as very illegal," Drenkard said. The studies estimate that about 43 percent of the smuggling into Utah is by such commercial operations seeking to resell cheap cigarettes.
Frank Hales, assistant director for the Utah Tax Commission, questions whether commercial smuggling is so widespread. "We're not seeing that as we do our cigarette inspections, at least we're not seeing cigarettes for sale in Utah establishments that don't have the proper Utah stamp."
Drenkard said there is also "the more casual type of smuggling, which is like when you do a weekend in Las Vegas and while you are there, if you are a smoker, you notice that a carton of cigarettes is less expensive so you bring back two or three."
The studies estimate that just over half of the smuggling into Utah is from that sort of personal purchase.
Hales said that could indeed be happening, but he is skeptical about the extent of the problem especially since Nevada's cigarette tax was raised in the past year above Utah's.
"That was the closest state for the population centers in Utah," he said. "For someone to go from Salt Lake up to Idaho is a little more of a drive than if they were going over to Wendover."
Utah law requires anyone bringing in cigarettes from other states for personal use to pay Utah tax on them through forms that may be filed with the tax commission, Hales said. Failure to do so violates state law, although few comply and enforcement is rare.
Drenkard noted that smuggling generally is less pronounced in Western states than in the Northeast, where even bigger tax-rate differences occur among states separated by shorter distances.
For example, the study estimated that 81 percent of the cigarettes sold in New Hampshire with a state tax of $1.78 a pack were smuggled out of the state bound for New York (with a state tax of $4.35 a pack, and the top state for smuggled-in products) or Massachusetts (with a $3.51 tax).
"Public policies often have unintended consequences that outweigh public benefits. One consequence of high state cigarette tax rates has been increased smuggling," the Tax Foundation report says.
However, Rep. Paul Ray, R-Clearfield, who sponsored a cigarette tax hike in 2010 from 69.5 cents a pack to the current $1.70, said state officials knew that smuggling would increase and factored that in during debates on overall costs and benefits.
"We knew some people would go to Evanston[, Wyoming] for cigarettes," he said. "But the reason I pushed it was to help decrease smoking rates, especially among youth who are more sensitive to prices. And [smoking rates] have dropped."
Utah has the lowest rate for smoking in the nation for both youth and adults 4.4 percent of youth, and 9.1 percent of adults in 2015, according to the U.S. Centers for Disease Control and Prevention.
Ray said he has heard no talk of trying to increase Utah's cigarette tax again, mainly because smoking rates are remaining low. The current state tax of $1.70 is 22nd highest among the states.
However, Ray said he will attempt again this year after a failure last year to impose tobacco taxes on e-cigarettes. "They are a tobacco product and should be taxed like one," he said, adding he hopes that would also decrease high usage rates among teenagers.
Ray said Utah's neighboring states "are also discussing raising their cigarette taxes," and that may help to decrease smuggling.
Top states for cigarette smuggling, 2014
1. New York, 55.4% of all cigarettes are smuggled in.
2. Arizona, 49.6%
3. New Mexico, 46.2%
4. Washington, 45.2%
5. Minnesota, 35.5%
6. California, 30.9%
7. Massachusetts, 29.3%
8. Utah, 26.8%
9. Wisconsin, 26.6%
10. Texas, 25.9%
Source: Tax Foundation, Mackinac Center for Public Policy.