Tobacco Road

Cigarette smuggling threatens to become a major problem.

Ed Carson from the March 1995 issue

(Page 3 of 3)

Other Michigan stores are reporting a surge in cigarette-related theft. Jim Garmo, who has run the Galaxy Superstore in Ypsilanti for about 10 years, says he had never suffered any break-ins until the tax increase. Since then, however, Garmo says that his store was burglarized nine times for cigarettes between June and October. And sales have dropped from 1,300 cartons a week to 350 cartons.

One reason why cigarette smuggling in the United States is almost certain to keep expanding is that even politicians with reputations as tax-cutters often rely on cigarette tax hikes. Michigan's recent voter-approved increase was part of Republican Gov. John Engler's plan to cut property taxes (See "Engler's Angle," August/September, 1994).

The Republican-controlled Congress is unlikely to increase the federal cigarette tax in the near future, but state taxes continue to rise. Arizona voters narrowly approved a 40-cent-per-pack increase last November to fund indigent health expenses.

Higher cigarette taxes will not only be a disappointment for prohibitionists and tax-starved politicians. If a large increase goes forward in the United States, cigarette smuggling "will make the illicit drug trade look like peanuts by comparison," warns Stamler. With 45 million smokers in the United States, there is a huge potential black market. Organized crime will enter its second golden age.

But more important, Americans will become comfortable with routinely breaking the law and evading taxes. Repeating Canada's experiment in excessive cigarette taxes may well threaten the very fabric of American society.