Sell 'Em if You Got 'Em: Cigarette Taxes Help Make Smuggling Smokes Profitable

A draft report by the Virginia State Crime Commission, quotes a Virginia State Police Officer suggesting that cigarette bootlegging is now more profitable than trade in cocaine, heroin, pot, or guns.

To the extent that is true, it is possible in part because state and local taxes in high-tax states such as New York and Illinois can add $5 or more to the price of a pack of cigarettes compared to low-tax Virginia or Missouri.

A trunk or a truck filled with cases of smokes can yield a five-to-seven-figure payday. It’s a temptation that many—including small-time criminals, cops, military personnel, convenience store owners, cigarette wholesalers, and organized crime—can’t pass up.  A roundup of recent stories:

  • Last week, the Feds filed a forfeiture complaint seeking to seize an airplane, four semi trucks and $2.6 million in cash from a Kansas City, Mo.-based smuggling ring. Most of the cigarettes were sold in New York.
  • On Monday, thieves in Columbus, OH smashed a car into a convenience store and made off with 120 cartons of cigarettes—the 18th cigarette-related theft in the city since July.
  • Two weeks ago, a former Prince George’s County, Md. cop forfeited $2.7 million and was sentenced to five years in jail for providing protection to a cigarette bootlegging operation. Another officer pled guilty in May.
  • Last week, Prince George’s County, Md. prosecutors indicted nine cigarette smugglers caught in July and August. Maryland officials reported 115 cigarette trafficking violations in fiscal year 2011, which ended in June.
  • Last week, a Northern Virginia couple who bought 400,000 cartons for transport to New York from undercover police agreed to forfeit cash, cars, and land.
  • Last week, a man was charged with identity theft in La Crosse County, Wis. for using stolen credit card numbers to purchase cartons of cigarettes. More charges are pending.
  • In August, an armed man hijacked a cigarette delivery truck in Galveston, TX.

Military commissaries and PX stores—where no federal tax ($1.08 per pack) is assessed—and Indian reservations also supply the underground cigarette market, which is active and profitable even within states, as tax rates can vary between counties.

Cigarette smuggling has provided a revenue stream for organized crime for over 50 years. More recently, Al-Qaeda, Hezbollah, and MS-13 have profited from the trade. "Some violent gangs now are selling cigarettes, drug traffickers are selling cigarettes—there are definitely some violent people who are involved," Jeffrey Cohen, an associate chief counsel for the Bureau of Alcohol, Tobacco, Firearms and Explosives, told the Richmond Times-Dispatch.

In 2010, President Obama signed the Prevent All Cigarette Trafficking Act (PACT), which requires wholesalers, distributors and manufacturers to register with the ATF and file monthly invoices to authorities in each state where they do business. It also prohibits the mailing of cigarettes (with some minor exceptions).

Reason readers may have cause to doubt whether ramping up enforcement will curtail black market activity.

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  • sarcasmic||

    With all that asset forfeiture, don't expect the laws to change anytime soon.

  • Doctor Whom||

    Obviously, if a situation is the direct result of government policies, the only acceptable solution is more and harsher government policies.

  • sarcasmic||

    There was never an intention to create a black market when these policies were passed, so obviously repealing them is not an option. Don't even discuss it or mention it. Do not even acknowledge its existence.

  • rts||

    Forget smokes, cheese smuggling is where it's at.

  • Tim||

    Where there's smoke, there's fire.

  • Mr. FIFY||

    That's what ya get, leftists, for demanding higher cigarette taxes... more money for organized crime from bootleg smokes.

    Stupid fuckers.

  • Brandybuck||

    The good intentions are all that matters. Seriously, ask them. They don't give a shit that their policies fail, they only care that they had the right feelings when they implemented them.

  • entropy||

    Yup. Hit and run, drive-by paternalism.

    They feel very proud to have shut down the sweat shop.

    Do they mind the kids who used to have 2 good hands to sew sneakers with cutting off their arms so they'll make more pathetic beggars at the airport, the only option left to them now?

    No not really, no.

    Do any of the dipshits who supported LiveAid feel guilty about prolonging the famine? Nope.

  • Mr. FIFY||

    So-cons think this way, too.

  • R C Dean||

    But, but, its an unintended consequence!

  • Restoras||

    Ha Ha!

  • ||

    To the extent that is true, it is possible in part because state and local taxes in high-tax states such as New York and Illinois can add $5 or more to the price of a pack of cigarettes compared to low-tax Virginia or Missouri.

    Simple solution: force those states to raise taxes too, and then send the revenues to New York and Illinois.

  • Lord Humungus||

    COMMERCE CLAUSE!

  • Doctor Whom||

    Impose a penaltax.

  • Jordan||

    As I told Tony on another thread yesterday when he was bragging about Progressives' record on the Drug War: they'll just replace it with a War On Other Things Poor People Like, such as sugar and cigarettes. And here we are.

  • Mr. FIFY||

    Most anti-smokers are "progressives".

  • Restoras||

    They do hate freedom, especially if you are free to screw up your life or pursue icky things they don't like.

  • sarcasmic||

    They do hate freedom

    No they don't! They love freedom!

    They want to be free from nasty cigarette smoke and nasty smokers!

    They want to be free from having to walk past shivering smokers outside buildings!

    They want to be free from subsidizing the health care of said smokers!

    Why do you hate freedom?

  • Rights-Minimalist Autocrat||

    It's because freedom is slavery.

  • Jordan||

    Yes, that was my point.

  • Pip||

    And yet, most smokers vote Democrat. Funny that.

  • Mr. FIFY||

    And most wealth-enviers want their taxes raised, and also vote Democrat.

  • OldMexican||

    Sell 'Em if You Got 'Em: Cigarette Taxes Help Make Smuggling Smokes Profitable


    Nooo!

    "A planet where taxation creates arbitrage opportunities?"

  • OldMexican||

    In 2010, President Obama signed the Prevent All Cigarette Trafficking Act (PACT), which requires wholesalers, distributors and manufacturers to register with the ATF and file monthly invoices to authorities in each state where they do business. It also prohibits the mailing of cigarettes (with some minor exceptions).


    And there's no doubt that more onerous regulation is the answer to stem all forms of smuggling to a trickle and...

    ... what are you guys laughing at???

  • Brandybuck||

    Hey it worked for Marijuana! Have you seen the size of the DEA lately? The drug war is an astounding success!

  • ||

    $1.08 a pack in the PX?!?!? Why didn't my colleague whose wife works in a PX tell me this when I used to be a smoker?!?!

  • Auric Demonocles||

    I believe they are saying that's the federal tax that's not being charged. So it's not that you pay $1.08 a pack in the PX, it's that you save $1.08 a pack over buying it somewhere else.

  • Bobarian||

    But this is completely false. Here in KY, the price for cigs in the PX or Commissary is actually more than they are outside the front gate.

    I think old nanny government sets the price based on local prices (because we're looking out for the soldier, don't ya know) and then the extra money they make just goes into the coffers (MWR for the PX, DeCA for Comm). The only savings for buying on post is local sales tax.

  • Lord Humungus||

    Ciggie taxes are higher in MI than neighboring OH. It's pretty common here to buy a few packs, er, cartons and bring them back for a smoker friend. I'm shocked, just shocked, that someone would do this for profit!

  • Almanian's Evil Twin||

    Yep, the two times I was transferred to Ohio I was still smoking, and I was sooooo happy! Just for the roads (seriously) and cigarette prices.

    The first time, I lived close enough to the IN border that when OH raised their cig taxes, I just started driving to Indiana a couple times a month - 5, 6 cartons, good for a few weeks, go back...

    I finally quit smoking at my Cleveland assmt a couple years ago. The amount I save not smoking now....what it cost the government in "revenue" is just an additional blessing. The fuckers.

  • rts||

    what it cost the government in "revenue"

    That's stealing! You're not paying your fair share!

  • ||

    Heh, wonder if we'll get to a point where cigarette purchases are compulsory, you know, for the revenue, but the cigarettes must then be turned in to a recycling center for resale.

  • Loki||

    Nah, but there will be a penaltax for failure to purchase cigarettes.

  • R C Dean||

    On a related note, I remember seeing that Russian organized crime in NY made millions off of dinking around with the gas tax somehow.

  • Auric Demonocles||

    Dennis: Alright buddy, now explain to me how exactly we are going to calculate the totals?
    Charlie: Oh, it's easy dude. You pour gas into the car using one of these funnels, right? And I count how much gas is going into the car.
    Dennis: Alright, let me... let me just stop you right there. How exactly are you planning on counting a liquid?
    Charlie: Uhh, I know how to count dude, I'm not...

  • Tulpa Doom||

    One reason why the common leftist solution to the drug war/prostitution/etc problem -- legalize it and tax the hell out of it to pay for social problems -- is DOA.

  • Tulpa Doom||

    programs, not problems.

  • ChrisO||

    I think you had it right the first time.

  • Death Rock and Skull||

    Fuck excise taxes.

    Any tobacco traders, I will buy drinks for.

  • Loki||

    In 2010, President Obama signed the Prevent All Cigarette Trafficking Act (PACT)

    I suppose reducing or eliminating the taxes that are providing the incentive never crosses anyone's mind? I know, I know, what am I thinking, suggesting that the government actually fix a problem they created in the first place. That's not how it works, but I thought I'd throw it out there, you know, for the lulz.

  • 0x90||

    "Two weeks ago, a former Prince George’s County, Md. cop forfeited $2.7 million and was sentenced to five years in jail for providing protection to a cigarette bootlegging operation. Another officer pled guilty in May."

    And some people think there are no good cops.

  • Tulpa Doom||

    I'm sure he wasn't doing it out of the kindness of his heart....

  • Romulus Augustus||

    Works with all kinds of goods where one state taxes hell out of something that a nearby state doesn't. Such as buying wine in Delaware at 1/3 off the Penna. Commie Liquor Store system. And I once worked for a guy who was in Air National Guard who would file flight plans to visit air bases in states with low booze and beer taxes - he'd head back to home base with the cockpit loaded with
    merchandise.

  • Loki||

    he'd head back to home base with the cockpit loaded with merchandise.

    IOW he turned his plane into a tax player funded smuggling plane. Nice, I like the cut of his jib.

  • Pip||

    "Last week, a Northern Virginia couple who bought 400,000 cartons for transport to New York from undercover police agreed to forfeit cash, cars, and land."

    Land? WTF?

  • Auric Demonocles||

    Where do you think they stored the vehicles they used to transport those cigarettes? Therefore, that land is suspect.

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