Tag: High Taxes

The Smokeasy: Bootlegging Returns To America

Betty Bootlegger

By Darren Smith, Weekend Contributor

With many states grappling with the need for tax revenue and the otherwise laudable effort to curtail cigarette smoking among their citizens, laws of supply and demand are beginning to having unexpected consequences to some. Rises in taxation of cigarettes with prices in one location as high as $15.00 per pack, the majority of cigarettes consumed by smokers there are now bootleg. According to the U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives, nearly $5 billion in revenue in 2010 was lost because of smuggling. But this figure is very likely to rise dramatically since many states since enacted even higher levels of taxation.

The situation has formed a fertile ground for illegal cigarette trafficking and there have been inroads into organized crime. Sources of illegal cigarettes have been neighboring states where tax rates are lower, Native American reservations, and even foreign sources of the same brand names, often from Vietnam, Thailand, and Eastern Europe. Wholesale illegal supply chains are becoming increasingly significant. While cigarettes are otherwise available, albeit at a higher price, these states are beginning to see a softer form of prohibition. But there is also a very dark side to smoking bootleg cigarettes. Illegal cigarette trafficking has been used as a vehicle to channel money to foreign terrorist organizations. Are the benefits worth the costs inherited from high taxations?
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