Bad for your health in more ways than you may realize.
As predictably as the Sun rises in the East, cash-strapped states who are strangling the golden goose have found that slippery golden goose has gone underground.
Larry Penninger, acting director of the tobacco diversion unit of theBureau of Alcohol, Tobacco, Firearms and Explosives (ATF), says investigations and prosecutions involving tobacco trafficking have been increasing as smugglers flood high-tax states with cigarettes from low-tax states.(italics, ours)
From 2007 to last year, 27 states raised their cigarette taxes, according to Michigan’s Mackinac Center for Public Policy, which closely tracks tobacco tax rates across the country. Mackinac describes tobacco smuggling as an “unintended consequence of high cigarette taxes.”
There is so much illicit money to be made, Penninger says, that some drug and weapon trafficking organizations are adding tobacco to their product lines to boost profits. For example, in low-tax states such as Virginia, where cigarettes cost about $4.50 a pack, smugglers can sell a truckload (typically 800 cases) in New York at $13 a pack. New York is the highest tobacco taxing jurisdiction in the country.
Smuggling costs states and the federal government about $5 billion, according to U.S. government estimates. “Everybody out there (involved in illegal trafficking operations) is tapping into tobacco,’’ Penninger says.
Bless their hearts... it's as if Mackinac stumbled, quite accidentally, upon this phenomena.
Seriously, just what did the states think was going to happen when they started jacking up the price of cigarettes via higher taxes?
The statist just doesn't get it - he thinks that if you add a 75 cent sin tax on a pack of cigarettes, he is going to get that extra 75 cents x the amount of packs of cigarettes sold before that tax was added. It just doesn't work that way. Of course, people will seek the cheaper alternative and if that means purchasing cigarettes that were brought over state lines, that is exactly what they are going to do.
This is just a perfect illustration of how taxes alter people's behavior.
Terrific. Now states are out that projected revenue putting themselves in an even deeper whole and the feds have yet another potentially violent crime product they have to deal with all because of extremely short-sighted policy made by state law-makers that are economic dunces and who cannot see beyond their own noses as to the ill-effects down the immediate road brought about by their legislation.