Drug War

When Politicians Raise Cigarette Taxes, the Terrorists Win. No, Really.


This week the New York legislature approved a $1.60-per-pack hike in the state's cigarette tax. As of July 1, the state tax will be $3.10 $4.35, the highest in the country. That's in addition to a federal tax of $1.01. In New York City, which imposes its own levy of $1.50 a pack, the total tax will be $5.61 $6.86, not counting a sales tax of 8.5 percent. The upshot is that premium brands will cost more than $11 a pack, with taxes accounting for the vast majority of the price. In New York City, the government will be making more than 20 times as much on each pack of cigarettes as the tobacco companies do. (Nationwide, by R.J. Reynolds' reckoning, the government's average profit on each pack of cigarettes was $3.17 in 2009, compared to the company's profit of 30 cents or so, which makes Philip Morris et al. look like minor shareholders in the business.)

The heavy taxation has elicited concerns about black market activity as well as complaints from smokers. Assemblyman Michael Benjamin (D-Bronx) told New York Daily News political columnist Celeste Katz that "he reluctantly voted for the hike because he didn't want to abet bringing state government to a halt by not voting for the budget bill that included the tax." But Benjamin sees the tax increase as a victory for terrorists:

Criminals and terrorists will be further enticed to take advantage of the price differential between high tax and low tax jurisdictions, i.e., NYS/NYC, Native American reservation smokeshops, and/or any southern state. We are sowing the seeds of increased terrorism-related activities by those who mean America, Israel and our other allies harm….

Terrorists win when smokers/grocers buy bootleg, untaxed cigarettes. Bootleggers will have an enormous incentive to smuggle untaxed cigarettes into New York. A convicted bootlegger funded the Lackawanna Six. Phony tax stamps were found in apartments used by the 1993 WTC bombers and a group of Bronx Muslims arrested last month. Interpol and the ATF have identified cigarette smuggling as a revenue source for international terrorism….Yesterday's budget action has set plans in motion for those who wish the USA and Israel harm.

Although both Katz and Jaya Saxena at the Gothamist treat Benjamin's comments as patently absurd, it's indisputable that cigarette smuggling is a significant source of income for terrorist groups such as Al Qaeda and Hezbollah, along with run-of-the-mill thugs, and that legislators enhance this opportunity by approving dramatic tax increases like this one. It is more reasonable to blame politicians for the problem than it is to blame smokers looking for affordable cigarettes, just as it is more reasonable to blame prohibitionists for helping to fund terrorists and other criminals by creating a lucrative black market in politically incorrect intoxicants than it is to blame drug users, as the federal government's anti-drug propaganda does.

[I've corrected the state tax figures, which were off by $1.25 in the original post.]

NEXT: Guns Save Lives

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. It is exactly right. And there are no Rockefeller laws for smuggling cigarettes. Which business would your rather be in? One where you have to buy contraband that is illegal nearly everywhere in the world from murderous South American and Mexican gangs and risk huge minimum mandatory prison sentences smuggling it into the country? Or a business that requires you to drive to North Carolina, buy a legal product and transport it to New York where it is also legal and you just have to sell it under the table?

    Cigarette smuggling sounds like a much better criminal enterprise than drugs.

    1. On top of this, the Government has the gall to portray the cigarette manufactures as “merchants of death”, when they make 10 times the profit from cigarettes as the tobacco companies do.

  2. I haven’t smoked in years, but I voted against the WA state cig tax hike that was on the ballot a few years ago(it passed, of course).

    I just happened to look at the cigs at my local grocer and saw that a carton of Marbs is $75! Glad I stopped.

    1. the Southern states will never raise their taxes to equal the NE and far west. They are literally pissing in the wind on this. I know couple of people who live in Northern VA but have family in New York and bring up a couple of cases of cheap Virgina cigarettes to sell to family and friends whenever they go up. It is very lucrative. How do they plan to stop that?

      1. SWAT teams. We’ll train* more if we have to.

        *”give weapons and armor to thugs,” whatever, as long as these law breakers die. That’s what counts.

      2. Or Civil War 2.

        1. Uh, most of the good military assets are based in the South this time around.

      3. I was told that credit card companies share, or provide information to certain states regarding out of state sales, like to certain out of state Indian Reservations. The one I deal with, accepts an “on-line check”. None of that third party shit to worry about.

  3. Here’s an idea. We fly all of our politicians, dog murderers, and high level ass kissing bureaucrats(every level) over to the Pakistan/Afghanistan border and throw them out from 30,000 feet. One of them is bound to land on Osama bin Laden.

  4. How rude of Assemblyman Benjamin to point to the elephant in the room.

  5. So if I dodge the tax, sell cheap cigs, and spend the profit on strippers, I am fighting terrorism.

    1. Yes…yes.


    Its like a Pinata made entirely of money!

  7. because he didn’t want to abet bringing state government to a halt


    1. Exactly. People might notice that, yes indeed, life will go on without the nanny state wiping our butts for us.

      1. Awwww! We lose the spanking too? Oh well.

  8. You know, if Congress were worth a shit, they’d suspend business, arm themselves, and go hunt down bin Laden. 435 of America’s dirtiest, most devious and dangerous thugs. How could they lose?

    1. Sounds good at first, but in that scenario, it’s hard not to root for the terrorist.

      1. There are rules of engagement; who exactly is the terrorist here?

      2. It’s kind of like watching two teams you hate play, you just root for maximum damage to both sides.

        1. You mean like Argentina v. Mexico? Fuckem both.

    2. Perhaps when they get there, we can stop loss them indefinately.

    3. Governing by feel good soundbites probably won’t translate to well to fighting on the ground. But who knows?

      1. Pelosi’s Medusa look could turn all the Islamists to stone…. although it might harden their position on women covering up in burkas.

        1. How will those statues enforce the burka rules?

          Or do i not understand how Medusa works?

          1. It would be assuming that any of them were able to withstand the stone-turning properties of her horrid appearance.

            1. That’s a pretty unlikely assumption.

      2. Have you seen these pusses lately?

      3. My Senator, Babs is four and half feet of steel and sinew. She is combat ready and I’ll be happy to push her out of the plane.

        1. Take a number.

    4. Torture is illegal.

    5. Honestly, my money is on Congress. There’s no limit to their power.

      1. We tried.

  9. I like the uniform way New York media bat-signals its racist-ass readers with “one smoker says” quotes.

    If you smoke, you’re black. Get back, get back.

    1. I’m looking for it, but I don’t see it. Where in the article does it use that phrase (“one smoker says”).

  10. I’ve mentioned this before, but my grandfather (a Canadian citizen who worked in the US) used to smuggle cigarettes and alcohol into Canada (in the 1950’s), because their taxes were so much higher.

    My grandmother told me the story of how the mountie contact they had (who liked cheap cigs & booze, I guess) came to tell her of bust the RMCP had planned. She went off in their sleigh (yes, with horses) to meet my grandfather before he got to the bust point. They stashed the smokes in the snow (to be picked up later), and she brought him home in the sleigh. When the RMCP caught up to them, they took the tarp off the back of the sleigh to show that all they had was some firewood.

    “Cigarettes? Nous ne avon pas les cigarettes. Je ne comprends pas.”

    So they don’t always get their man, after all…

    1. Note: my grandfather never particpated in terrorist activities. However, he did move his non-English speaking family to this country, which is pretty close for some people on this board.

      1. So he was French-Canandian? No wonder he liked fucking the Canadian government.

        1. My great uncles used to have political conversations about how much tax money Ottawa was taking versus what PQ was getting for it. People (especailly here in the US) talk about the language issue, but this was a big impetus for the independence issue that never got much exposure.

          Even in the mid 1970’s, the infrastructure (roads, etc.) that I saw in Quebec looked rather primitive, and poorly kept after. (Of course, there could be other reasons for that)

    2. You’re part Canadian?!?

      1. DUH?! Penguins come from Canada.

        (Southern Hemisphere only? You don’t say?!)

        1. “BakedPuffin” would have given the game away. See below.

          1. BakedPuffin sounds far, far dirty.

            “I laid out all day and baked my puffin. Wanna come over later and take a look?”

      2. *sigh* Yes. I tried to keep it under wraps for as long as could by pretending an antipathy for Canadians, that I, obviously, did not feel, but I have to admit it: my family is Canadian.

        I like beer, hockey, maple syrup, beer, curling, and beer. Despite living in Florida for over 20 years, I can still wear shorts when it’s 55 degrees oot. I punt on third downs. I’ve…I’ve owned Triumph and Gordon Lightfoot albums, and my favorite song when I was 10 was by Lorence Hud.

        1. Sweet fancy Moses! I feel so dirty now. I can’t believe I’ve been so nice to you.

          It was a blow when she found out my wife was 1/32nds French and now this? I’m going to need a minute.

          1. I recently found out that the French name in my otherwise-illustrious family history was actually of Swiss origin, twas the happiest day of my life.

        2. But what do you put on your French fries?

          1. Certainly not Freedom mssr.

          2. Vinegar. I can only eat them ocassionally in the correct fashion – with gravy and cheese curds – for health reasons.

            1. I almost never see malt vinegar as a french fry condiment at US restaurants, but it’s so necessary for fish and chips scenarios.

              I know some Canadians who put mayo on their fries, which is even grosser than ketchup on mac and cheese.

              1. I want my Kraft Dinner!

              2. Dag, my British friend used to complain about not having the correct accompanyment for her chips when the restaurant we frequented had fish & chips. I surprised her with some malt vinegar (‘Publix’ groceries down here have a “British” food section due to the large contingent of ex-pats), and I thought she was almost going to cry.

              3. I always thought mayo on fries was a Belgian thing. I’m always reminded of the KITH “Dar-ill” sketch where he’s a little boy begging his mom to put more mayo on his fries.

                1. Go to 5 Guys burgers. They have the malt vinegar right next to the ketchup. Pretty damn good fries too.

              4. Mayo on potatoes is not gross. You’ve never eaten potato salad?

              5. I’ve observed that malt vinegar is showing up more and more often nowadays… and a good thing too! It’s way better than ketchup.

                Unrelatedly, I had to watch someone eat ketchup on mac and cheese the other day (they did it willingly)… I thought I was going to be sick.

        3. Why do Canadians like beer? The Canadian beer is god-awful. There is little microbrewed beer available in liquor stores, and what’s available is absolutely terrible. At almost any gas station in the US you can find some decent beer, but never in Canada. I stopped buying beer in Canada alltogether, now it’s only wine for me over there. It’s only 60% more expensive than in the US.

          1. I always really liked Labatts. Maybe it’s a genetic thing.

          2. I like Molson Canadian (what do they call it in Canada?). Quebec produces many fine ales.

            1. Indeed, Quebec is the home of “Unibroue”, which I treat myself to on occasion. I’ve never said a word against Quebec since I first tried it.

              I think the larger Canadian brews are Macro piss in drag, though.

              1. Maudite and La Fin du Monde are the best I’ve tried from them. And they’re my new favorites.

        4. You are dead to me. It’s the Gordon Lightfoot albums that really put me over the edge, though.

          1. ? “‘Pisiarch, ya better stay clear, if I find ya creepin’ roun’ my backstair” ?

          2. Hold on. He could conceivably have Shat blood. That’s American, whatever the paper says.

          3. You leave Gordan alone. Wreck of the Edmond Fitzgerald is awesome. I wish my last name were Fitzgerald just so I could name my kid Edmond.

        5. All this, plus good French grammar? Baked, I knew I liked you.

          The secret Canadians will soon outnumber the Yanks on H&R. Je me souviens! Or something!

          1. “good” French grammar? It’s “avons” not “avon.”

            1. She said good, not great. I’m used to speaking, not reading / writing French. If there’s an additional non-spoken consonant at the end of the word, it’s a toss-up if I’ll know it’s there.

          2. I’m just sorry I’ve been too ashamed to admit it for so long, you know? Especially since we’re now freer than the US. Harper may be a bit of a prat, but I’ll take him in a heartbeat over Hopey Changey.

            And as for the rest of you hosers, take off, eh?

          3. I find that unlikely. Does Canada even outnumber California?

            1. Yes, but Dagny is a gorgeous woman, so she counts as 20 regular people.

          4. “Je me souviens!”

            You know Dagny that is actually a secret French insult aimed at you stupid English pigs. Your typical English pig translates it as “I remember” as in I remember when we were independent or something. But that is really not a good translation. What it really implies in French is closer to “I remember who I am” or “I know who I am”, which is specifically meant to say that the rest of you yank boot licking English pigs in Canada don’t.

            1. Not to imply that you English Canadians are pigs. I just use to term because that is how the Quebecois view you. It is not exactly one big happy family up in Cannuckistan.

              1. John, it’s not meant as an insult, just a point of pride for the Quebecois.

                We do not forget, and will never forget, our ancient lineage, traditions and memories of all the past“.

                If you’re insulted by that, I really don’t know what to tell you.

                1. It does bring to mind the famous line from Talleyrand about, I believe, the Bourbon kings of France:

                  “They have learned nothing and forgotten nothing.”

                2. It is very subtle. It implies that the rest of you in Cannuckistanis don’t. And it also implies that they really are not part of greater Cannuckistan.

                  1. Okay, John, I really think you need to reset your paranoia meter on this. If you haven’t already, read the post I wrote about my great uncles bitching about Ottawa taking taxes out of Quebec, and not returning the money in goods or services. The arrogant Frenchman in your head is a stereotype.

                    RC – people still visit the Alamo down your way? Just wondering…

                    1. THe Alamo sits right in downtown San Antonio. And it is a great place to visit. As are the other missions in the city. And if I am not mistaken, RC lives somewhere out in the wilds of West Texas, which isn’t really part of the state anyway. Texas ends at the I 35 corridor. The rest is just dessert and jackrabbits.

                    2. And my wife is 1/4 Quebecois Baked. So I have nothing against Frenchman.

        6. At this point I suppose I should admit that my grandmother was French Canadian.

        7. It’s OK.

          Many former Canadians have been rehabilitated and gone on to lead useful lives.

          1. [citation needed]

            1. guilty as charged

            2. guilty as charged

          2. Such experiments have achieved short term success. But the subjects have always after a few years reverted back to their primitive curling and beer drinking ways.

    3. yes, with horses

      No reindeer? Lame.

    4. About 15 years ago, I was in Las Vegas and met an older Canadian couple. They were very upfront about the fact that they made two trips a year to Las Vegas, each about two weeks long, and paid for the trips by filling their motorhome with cigarettes and taking them back to Canada to sell.

      Niether one smoked and they loved the high Canadian taxes in effect at the time. I don’t know if the differential is as high now. When I was in Canada last year, cigarettes were about $1.25 more there than here in California.

  11. We are sowing the seeds of increased terrorism-related activities by those who mean America, Israel and our other allies harm….

    Can we send them to Gitmo?

  12. The thing is that eventually there will be a breaking point for the government in terms of relying on raising cigarette taxes to cover budget shortfalls. Many of the tobacco company lawsuits are beginning to die out and that source of revenue will soon dwindle. They can’t just raise the tax in perpetuity and expect consistent increases in revenue collected.


    1. “Many of the tobacco company lawsuits are beginning to die out and that source of revenue will soon dwindle.”

      Didn’t most states sell that off already, i.e. “Are you getting payments from a structured settlement but you need cash now?”

  13. They can’t just raise the tax in perpetuity and expect consistent increases in revenue collected.

    Congress: Why Not?

    Tman: *facepalm*

    1. It’s almost like if you TAX people more, they end up spending less and the economy SLOWS.

      So simple to understand, yet so hard to explain to a liberal.

  14. You know, there are a shitload of SCOTUS decisions today, and no one at Reason seems to have any interest in them.

    The petition signers in WA who wanted to gut the public information law went down to flaming defeat. [If you’ll forgive the pun.]

    1. Okay, then, name some for us.

  15. I agree that the higher taxes are making cig smuggling more profitable and more common and think the taxes are nothing more than a cynical plan to collect more revenue.

    But – not too long ago we were making fun of the ONDCP for linking drug use to supporting terrorism through exactly the same sort of blackmarket linking of suppliers to customers.

    1. With a name like that, you must have a remarkable lineage.

    2. But – not too long ago we were making fun of the ONDCP for linking drug use, rather than prohibition, to supporting terrorism


    3. Exactly, and calling them out for this is bush. It’s wrong because it’s liberty restricting. It’s not wrong because someone might (will) profit from the black market, then use his proceeds to finance terrorist activities.

  16. I punt on third downs.

    And I’ll bet your backfield is always in motion.

  17. Actually, just pretend I never said that. I’m a little slow today.

  18. The heavy taxation has elicited concerns about black market activity…

    Ya think?

  19. Do these increased taxes apply to cigarettes bought via mail/phone/internet from outside NYC/NY? It’s not black market, just an out-of-state or out-of-city market.

    I’m feeling awfully entrepreneurial.

  20. Any New Yorkers out there know of a mail-order that works?

  21. You folks out in NY should know that you’re gonna see a lot less packs sold with a NY stamp.
    I came across a young black man with NY ‘statue of liberty’ plates. He added a bag filled to the limit of the smoke shop to an almost uncountable stash in his trunk. I asked him why he replied, holding up three cartons, “This pays for the gas back home.” He then pointed to the remainder and added, “That there is a years grad school tuition at Columbia.” Before he resumed his journey he scarcastically remarked, “I love that blind f**k of a governor and our shem mayor.”
    I still remember the pictures on the nightly news a few years ago of burning tires on the indian roads because of this.

    1. what state was the kid buying the cigs

  22. I remember when Ontario tried this game, shit, 20 years ago. Smokes got up to a then-whopping five dollars a pack before they noticed the black market that had sprung up and cut the tax to something less punishing. Somehow I doubt Albany will follow suit.

Please to post comments

Comments are closed.