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Counterfeit or Out-of-State Cigarettes Sold Equally Throughout City: Study

 A new NYU study found untaxed cigarettes are sold all over the city, not just in low-income neighborhoods.
A new NYU study found untaxed cigarettes are sold all over the city, not just in low-income neighborhoods.
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GREENWICH VILLAGE — Untaxed cigarettes are sold pervasively throughout New York City's neighborhoods, according to a new study from New York University.

The study found that 15 percent of cigarette packs purchased across the city had illegal tax stamps, and that because the cigarettes were still being sold at full price, the extra money was being kept by store owners.

"We would've thought as researchers that there would be some neighborhoods that were really terrible and some that were really great," explained Diana Silver, the author of the study and an associate professor of public health at NYU's Steinhardt School. "In fact, what we find is it's all over... not just tourist neighborhoods, not just the low-income neighborhoods, not anything like that."

New York City's cigarette sales system involves "stamping agents" who purchase and affix tax stamps on packs sold to wholesalers. The stamped packs are then distributed to the more than 9,700 licensed retailers across the city.

Silver's study was funded by NYU's Institute for Human Development and Social Change and published in the peer-reviewed health journal Tobacco Control.

More than 10 percent of the stamps were counterfeit, and 4.5 percent of them were from Virginia, which has no minimum legal price for cigarettes and the second-lowest cigarette tax in the country. New York City has the highest cigarette prices in the country, due to city and state taxes and a minimum price of $10.50.

The researchers purchased cigarettes at full price around 92 subway and bus stops citywide in order to ensure that the results were statistically representative across neighborhoods.

"After Eric Garner, I think people assumed this is something that's going on only on Staten Island, or it's excessive there," Silver said. "But it's not."

Garner, a 43-year-old Staten Island man, died July 17, 2014 after being placed in a chokehold by NYPD officers who were trying to arrest him on charges of selling untaxed cigarettes.  

Silver's study came out of an original study aimed at tracking youth purchasing of cigarettes in the city, when a researcher suggested looking at the tax stamps on the packs that had piled up.

"We were not expecting to find the number of counterfeit packs that we found," Silver said.

Similar studies have collected littered cigarette packs to try to calculate how much tax-dodging goes on from the consumer side or by individual black-market sellers, but little evidence about tax evasion by retail sellers has been gathered, Silver said.

And because her team only purchased cigarettes sold at full price, she said her study shows that taxes on counterfeit and out-of-state packs are being pocketed by store owners, rather than going to the city or state.

“Our findings underscore the need for intensive monitoring, oversight and support to help retailers comply with existing and new cigarette laws," Silver said. "The use of digital tax stamps, coordination of taxes across areas and systematic monitoring of enforcement efforts could help to address the issues we uncovered."