By Christopher Baxter/The Star-Ledger
A 2008 report by the state Treasury Department estimated New Jersey loses $500 million in uncollected tax revenue every year because of illegal cigarette smuggling.Hudson County Prosecutor’s Office
TRENTON — A Senate panel today advanced legislation to crackdown on cigarette smuggling, a problem with deep roots in New Jersey, and to increase penalties for importing, selling, distributing, transporting or possessing with intent to sell counterfeit cigarettes.
State law requires cigarette packs be officially stamped to indicate applicable state taxes have been paid, and residents are not permitted to possess or consume counterfeit or smuggled cigarettes that are untaxed, improperly stamped or unstamped.
The bill (S2516), advanced by the Senate Law and Public Safety Committee, would make possessing up to 20,000 unstamped cigarettes a fourth-degree crime, and would make possessing more than 20,000 unstamped cigarettes a third-degree crime.
The bill would also make it a third-degree crime to import, sell, distribute, transport or possess with the intent to sell cigarettes or packs of cigarettes that fraudulently bear a name, trademark or design of a legitimate cigarette or tobacco company.
It would also increase many fines and penalties associated with the illegal trade.
A report by the state Treasury Department completed in 2008, and made public in 2011, found about 40 percent of all cigarettes smoked in New Jersey were smuggled illegally, resulting in a loss of more than $500 million in uncollected tax revenue each year.
The percentage was found to be the worst of any state, largely because of New Jersey’s relatively high cigarette tax compared to some neighboring states, including those situated along major highway corridors to the south.
Mobsters, people with ties to terrorist groups, and small-time crooks turn a quick profit by smuggling cigarettes from other states or overseas and selling them in the state, according to the report, the first official estimate of the financial toll of the problem.