When Politicians Raise Cigarette Taxes, the Terrorists Win. No, Really.
24th June 2010
Every wonder why, with all the shit that tobacco companies take from the government, tobacco products aren’t just banned outright? Follow the money:
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, 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, 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 most of the price. In New York City, the government will be making about 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.)
And, of course, whenever government screws around with prices, what happens? Black markets!
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.