Massachusetts has a problem with cigarette smuggling—a problem, that is, from the point of view of tax collectors and government regulators. State officials have hiked tobacco taxes so high in pursuit of the twin not-so-compatible goals of enhancing revenue while also discouraging smoking that people are buying their smokes on the black market, smuggled in from low-tax jurisdictions or overseas.
In response, the state established the Illegal Tobacco Task Force, to crack down on those subjects who refuse to be passively milked or else give up on their vice. That unholy committee of cops and revenooers has come up with a plan for victory in pursuit of its "mission to confront and combat the illegal tobacco trade in Massachusetts": import personnel and tactics from the war on drugs.
Because we all definitely look to drug prohibition as a model for success, right? Well, not all of us—a lot of police, health professionals, and prosecutors are having doubts. More on that later.
In its initial report, released two weeks ago, the task force complains: "Several recent studies have indicated that approximately 11.9%-12.7% of all cigarette packs sold in the metro Boston area failed to bear a valid Massachusetts tax stamp. Another study using different methodologies and testing techniques estimates the size of the illegal cigarette market in Massachusetts at 15.53%."
Just as concerning for officials, smuggling has bled over into the growing market for "other tobacco products" including cigars and chewing tobacco, though the scope of the illegal trade is harder to measure.
This is a serious problem, we're told, because "cigarette smuggling costs the Commonwealth millions of dollars in lost revenue year over year."
Unsurprisingly, black market goods are brought in from states where tobacco is taxed at a lower rate—which is to say, almost anyplace else.
Actually, the Task Force—a collaboration between the Department of Revenue and the State Police—may be underestimating the amount of cash slipping through its fingers. The Mackinac Center for Public Policy, the go-to authority on American cigarette smuggling, tracks this sort of trade across the entire country. Its latest estimates, released in 2014, did indeed put smuggled cigarettes at 12.71 percent of the market. But that was before Massachusetts hiked the tax by $1.00 per pack to $3.51. A 2013 study also produced before the tax hike found that nearly 40 percent of discarded cigarette packages in Boston bore out-of-state tax stamps.
And why not bring them in from elsewhere when cigarettes are taxed at $1.78 per pack in New Hampshire, $1.60 per pack in Pennsylvania, and $0.30 per pack in Virginia? That's quite a savings.
As for those other tobacco products, smokeless tobacco is taxed at a rate of 210 percent of wholesale cost, while cigars and smoking tobacco are taxed at 40 percent of wholesale cost. Pennsylvania doesn't tax such products at all.
Smuggling may be a problem for tax-hungry state officials, but it's just good sense for Massachusetts residents trying to enjoy the pleasures of life. Understandably, that high tax differential creates a lot of space for underground entrepreneurs to profit by keeping those pleasures affordable.
"[O]nce taxes get far enough out of whack among states, basic economic incentives almost guarantee a thriving black market—and, eventually, an arms race between enforcement and motivated cigarette traffickers," the Boston Globe noted in a 2014 article on the illicit trade.
In the seemingly inevitable way of governments everywhere, Massachusetts officials appear to have embraced that arms race rather than consider de-escalation of any sort. In particular, they point with envy to enhanced penalties and enforcement powers in Rhode Island that, among other things, "expanded investigators' authority to search the premises of tobacco dealers and suppliers at all levels of the supply chain."
Hmmm… Draconian punishment and weakened search and seizure protections. What could the Task Force be getting at here?
Oh wait, here it is: representatives of Connecticut and New York law enforcement invited to advise their Bay State neighbors "noted the close similarities between narcotics investigations and illegal tobacco investigations. As a result, they suggested trying to find experienced narcotics investigators (often former police officers) to be part of any tobacco investigations team."
It's not only personnel. Smoke-tax enforcers advising the task force also recommended increased surveillance, use of paid informants, and undercover operations in order to target the black market created by high state tobacco taxes.
In other words, enforcement of taxes on cigarettes and other tobacco products should look increasingly like decades-old efforts behind laws against marijuana, cocaine, heroin, methamphetamine and the like—prohibition efforts that have brought ever-growing demands for more law enforcement power and resources because, like efforts to stamp out cigarette smuggling, they haven't worked.
"The war on drugs has been a tremendous failure," Houston Police Chief Charles McClelland admitted in October of last year at the launch of Law Enforcement Leaders to Reduce Crime and Incarceration, an effort in which he's joined by New York City Police Commissioner William Bratton, Los Angeles Police Chief Charles Beck, and Washington, D.C. Police Chief Cathy Lanier, among other criminal justice system veterans. They want to dial back harsh criminalization and lengthy sentences that have filled prisons with nonviolent offenders. They echo the call of the former cops and prosecutors of Law Enforcement Against Prohibition who have made similar—and stronger—arguments for years.
Likewise, the World Health Organization considers prohibitionist policies counterproductive and now urges that "Countries should work toward developing policies and laws that decriminalize injection and other use of drugs and, thereby, reduce incarceration" and ease access to health care. WHO also favors decriminalizing sex work and homosexuality for the same reasons.
Health professionals, police chiefs, and prosecuting attorneys now say that the surveillance tools, intrusive investigations, criminalization, and brutal penalties accumulated over decades of drug prohibition have been terrible and damaging mistakes.
But tobacco regulators in Massachusetts and elsewhere seem to think that they'll be brilliant additions to efforts to squeeze people for taxes on their smokes.