The Importance Of Cigarette Trafficking In The United States

A 2009 law approved by congress, the Children’s Health Insurance Reauthorization Act increased the federal tax on cigarette prices by 61 cents. Recently the Obama Administration’s budget request for FY 2016 calls for increasing the federal tobacco tax by 94 cents, to a total of $1.95 per pack. The federal revenue funds the State Health Insurance Children’s Program; also, states can impose their own tax on tobacco (Fiscal Year 2016 Budget of the U.S. Government). The raise in tobacco tax was passed to discourage usage and provide significant revenue however, others feel the tax is unfair to the low income population and high taxes encourages smuggling across state line. Especially states that border Iowa like Nebraska and Missouri. Teenagers
Large differentials in cigarette taxes across states create incentives for black market sales. One consequence of high state cigarette tax rates is increased smuggling as criminals procure discounted packs from low-tax states to sell in high-tax states. Growing cigarette tax differentials have made cigarette smuggling both a national problem and a lucrative criminal enterprise. Because Virginia's tobacco tax is the second-lowest in the United States, people buy cigarettes from the state, in bulk and sell them at enormous profit in New York and other high-tax states. (The urge to smurf; Cigarette-smuggling).The same is true about Iowa and Missouri. EspMissouri’s state cigarette tax is the lowest in the nation, a mere 17 cents per pack, a substantially lower cost when compared to Iowa’s state tax of $1.36 (Drenkard, Scott). At a minimum smugglers pocket the difference between what Missouri adds in tax --17 cents a pack-- and the higher rates imposed in Iowa.. The federal Bureau of Alcohol, Tobacco, Firearms and Explosives estimates that sales of illegal cigarettes cost government--local, state and federal--nearly $10 billion a year. For the smugglers, profits are better than those from cocaine, heroin, marijuana and illegal sale of guns, according to a report in September by the Virginia State Crime Commission. Moreover, the penalty for doing it--a maximum of five years in
Recently, a study in Tobacco Control examined littered packs of cigarettes in five northeast cities, finding that 58.7 percent of packs did not have proper local stamps. However, the problem of counterfeit state tax stamps can easily be fixed by new high tech stamps.(Chriqui, Jamie) These high tech tax stamps cannot be counterfeited and enable enforcement officials to readily identify smuggled cigarettes. California introduced a new high-tech tax stamp, that curbed smuggling. Since smoking levels are highest among people with low incomes, cigarette tax increases are regressive taxes that unfairly impact lower-income families and community. Lawerence W. Reed, former president of Mackinc Center for Public Policy, feels that high taxes are not a good substitute for education and persuasion; ‘What may seem like a choice ends up as a very heavy load on low and middle income families over the course of a year’ he writes. (The Hazards of Cigarette