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Virginia has a cigarette smuggling problem. Black market vendors are taking advantage of the commonwealth's low cigarette tax to buy tobacco and resell it in other states with higher cigarette taxes.
The black market cigarette business is far more lucrative than selling cocaine and heroin, says Steward Petoe, legal affirs director for the state crime commission. It's not a new trend, but demand for the cheaper Virginia cigarettes is as strong as ever due to another tax hike on cigarettes in New York and more curtailing of non-taxed cigarettes at northern Indian reservations, he says.
Smugglers have multiple ways to transport cigarettes without paying sales taxes, from manufacturing counterfeit tobacco products to becoming temporary retailers solely to buy them in bulk.
"A retailer was open for about two months, purchased $290,000 worth of cigarettes from Sams Club, and Virginia Tax Department, reviewing the records, realized that no sales tax had been received for any of these cartons," Petoe says. "That's an estimated $14,000 lost in revenue to the Commonwealth."
The commission hopes to propose bills to crack down on smuggling before the next General Assembly session.