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Van Dough: Why cigarette smugglers love New York.
Reason Online ^ | 7/5/02 | Jacob Sullum

Posted on 07/05/2002 8:06:56 AM PDT by Jean S

In Elizabethan England, the historian Egon Corti reports, tobacco sold for its weight in silver. That would suit New York Mayor Michael Bloomberg just fine.

Bloomberg recently signed a bill raising the city's cigarette tax from 8 cents to $1.50 a pack. With a state tax of $1.50, the highest in the country, New Yorkers were already paying more for cigarettes than other Americans. Now the price of some brands is more than $7, nearly twice the national average.

Ostensibly, the tax hike was a revenue measure. "City officials say the new tax will bring a much-needed $111 million into the city's coffers this year," The New York Times reported, "helping plug a budget shortfall of nearly $5 billion."

But Bloomberg said it was really all about public health. "This may be the most important measure my administration takes to save people's lives," he declared, arguing that higher cigarette prices will encourage smokers to quit, giving them extra years in which to thank him for the favor he is doing them.

In fact, the mayor doesn't even want the money. "If it were totally up to me," he said, "I would raise the cigarette tax so high the revenues from it would go to zero."

Bloomberg thus announced the purity of his own motives even as he took his cut from a business the anti-smoking movement depicts as inherently evil, profiting from the deadly folly of its customers. When a New Yorker buys a pack of Marlboros, the city will make four or five times as much as Philip Morris does. But that's OK, because the mayor's heart is in the right place.

For politicians confronting budget deficits, the opportunity to raise money at the expense of an unpopular minority while expressing sympathy for the people they're fleecing is hard to resist. So far this year 10 states have raised their cigarette taxes, and several others are considering it. The levies in New Jersey and Massachusetts may soon match or exceed New York's.

But this competition to pick smokers' pockets--I mean, to save smokers' lives--does have limits. Although Bloomberg seems to think that a high enough tax would eliminate smoking, in the real world smokers have alternatives.

Rather than pay $7.25 for a pack of Camels, for instance, they can buy them online for $2.70. Or they can buy them untaxed in New York, courtesy of smugglers who already make a nice living transporting cigarettes from low-tax states in the South to high-tax states in the Northeast.

The cigarette tax in New York City, where I used to live, is more than 100 times the tax in Virginia, where I live now. I may get into the business myself.

Then again, the competition might be a little too rough for me. A few months ago the FBI announced the arrest of 17 people accused of smuggling cigarettes from North Carolina to raise money for the terrorist group Hezbollah.

The government said the ring was earning as much as $10,000 with each van load. Thanks to Michael Bloomberg and the New York City Council, the potential earnings for terrorists have doubled.

Robert L. Shepherd, a former New York State tax official, predicts the city will see a decline in revenue as smokers shop around. "I think with $1.50 they'll pass the tipping point," he told the Times. That's what happened several years ago in Canada, where the government was forced to cut cigarette taxes in response to widespread smuggling and evasion.

Yet Bloomberg, who equates zero tax revenue with zero smoking, apparently thinks smokers will not be resourceful enough to avoid his tax. He also seems to discount the possibility that they will respond to higher prices by, say, economizing on other expenditures, getting a second job, dipping into their savings, going into debt, or turning to crime.

These assumptions are surprising, since Bloomberg also believes that life without nicotine is unthinkable for the average smoker. "This is not exactly freedom of choice," he informed opponents of the tax hike, "given that smoking is addictive and that the industry spends billions of dollars to get people hooked on it."

No doubt Bloomberg is right that some smokers will quit rather than pay exorbitant prices or go to the trouble of finding alternative supplies. But that choice will demonstrate that they were never the helpless victims he makes them out to be.


TOPICS: Editorial; News/Current Events; US: New York
KEYWORDS: bloomberg; cigarettetaxes; nannystate; newyork; newyorkcity; pufflist
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1 posted on 07/05/2002 8:06:57 AM PDT by Jean S
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To: JeanS
Anti-smoking nazi BUMP.
2 posted on 07/05/2002 8:13:50 AM PDT by goodieD
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To: JeanS
I've recently heard that the price of name brand idiot sticks in CA can go as high as $49 a carton.
3 posted on 07/05/2002 8:13:54 AM PDT by morjon
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To: JeanS
I actually hit the "smugglers" link hoping to find a list of names (cuz I need names!). LOL, no such luck.
4 posted on 07/05/2002 8:16:45 AM PDT by hellinahandcart
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To: JeanS
This guy is a total idiot. He's just started one hell of a black market in cigarettes.
5 posted on 07/05/2002 8:17:50 AM PDT by dr_who
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To: dr_who
This guy is a total idiot. He's just started one hell of a black market in cigarettes.

Bloomberg? Yep.

6 posted on 07/05/2002 8:22:05 AM PDT by NittanyLion
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To: hellinahandcart
Go to.....yesmoke.com...they'll air freight a carton from Switzerland for $15 bucks. Legal for now, I believe
7 posted on 07/05/2002 8:22:08 AM PDT by steve50
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To: steve50
Thanks for reminding me. I just placed my order for 9 cartons at 57.99 from www.stuffyourown.com.

My wife loves to make cigarettes while watching TV. It keeps her hands busy.

So New York City - STUFF THAT!

8 posted on 07/05/2002 8:31:59 AM PDT by Hunble
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To: steve50
WOW, I just did the math:

New York City:

9 cartons x 10 packs per carton at $7.00 per pack =

$630.00

This is absolutly criminal!

Just a few minutes ago, I ordered the same 9 cartons, for the low price of:

Subtotal 57.99
Shipping 8.95
Tax 0.00
Total 66.94

Do these idiots think that we are just as brain dead as they are?

9 posted on 07/05/2002 8:40:18 AM PDT by Hunble
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To: JeanS
They just raised the taxes on smokes here in Kansas as well. The Dept of Revenue info gal went on all the news shows to make it clear that anyone in possesion of more that 200 cigarettes without a Kansas tax stamp affixed will be fined $1,000 and could face jail time. I do not smoke, but I am considering starting a little side business...LOL.
10 posted on 07/05/2002 8:47:49 AM PDT by AdA$tra
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To: Hunble
I'm ready to start the RYO process myself. Could you recommend a good machine and a light no additive tobacco to start with?
11 posted on 07/05/2002 8:53:21 AM PDT by steve50
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To: Hunble
WOW, I just did the math

Here's some more math;

The average pack of smokes is 6.5 cubic inches and aren't very heavy
A typical semi-truck van measures 576" long (48') x 96" wide x 110" high....

How many packs of smokes can you smuggle in one trip? What is your minimum and maximum expected per/pack profits

12 posted on 07/05/2002 8:53:50 AM PDT by umgud
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Comment #13 Removed by Moderator

To: JeanS
Robert L. Shepherd, a former New York State tax official, predicts the city will see a decline in revenue as smokers shop around. "I think with $1.50 they'll pass the tipping point," he told the Times. That's what happened several years ago in Canada, where the government was forced to cut cigarette taxes in response to widespread smuggling and evasion.

Pretty much. For a while, there were some upstate NY'ers and Canadians making fat money floating smokes across Lake Ontario by the boatload...

14 posted on 07/05/2002 8:57:11 AM PDT by general_re
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To: steve50
I do not know about light tobacco, since I only use full flavour.

As for machines, I strongly recommend the Excel.

Contrary to logic, this low cost plastic machine runs circles around the more expensive ones. Having used the more expensive metal machines, this one simply astounded us.

BUY IT!

15 posted on 07/05/2002 9:00:33 AM PDT by Hunble
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To: Hunble
Thanks, I'll try a starter kit with that. There's a lot of places that handle a wider variety of tobacco. I've heard good things about the Danish Haarzwarz. Time to stop feeding these idiots with tax money.
16 posted on 07/05/2002 9:04:53 AM PDT by steve50
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To: steve50
Having used the more expensive machines for years, we were never happy with the quality control. They made decent cigarettes, but the backing density was difficult to maintain.

I smoke 3 packs a day, so we would were these machines out in about 2 years. Just out of curiosity, we decided to order the cheep plastic Excell.

The quality simply astounded us! Each and every cigarette is now fully packed without any annoying gaps.

For those just starting, if the cigarette is not packed tightly along it's entire length, you may end up with burning tobacco falling upon you when you least expect it!

A machine that will pack a cigarette tube well, it worth it's weight in gold.

17 posted on 07/05/2002 9:13:42 AM PDT by Hunble
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To: JeanS
Next comes violence as smugglers struggle over turf, followed by a call for increased police powers...a loss of civil liberties...

Just like Prohibition

and

JUST LIKE THE WAR ON DRUGS
Do you drug warriors get it yet?
18 posted on 07/05/2002 9:13:54 AM PDT by Maelstrom
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To: JeanS
You'll have a black market, all right, but you'll also have a "cottage" black market, a black market operated by amateurs. This is a great business opportunity for all those who commute from Long Island, Connecticut and New Jersey. They can buy a carton at the station paper stand and sell it in the office for aprox. $10 more. The same guys that operate the NYC football pools will make a market in buying smokes in the same place they sell pool sheets. NYC will be awash in cigarettes that are available at less than the "market" rate.

My bet is that 100s of building newspaper stand (many still run by blind guys) will go out of business as "lega;" cigarette sales shrink. Sure, smoking will decrease, but city tax revenue will decrease, as well.

19 posted on 07/05/2002 9:15:38 AM PDT by Tacis
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To: steve50
Got that beat.....
The lil Mom and Pop grocery store down the street sells cartons from Columbia for $9.99. They taste better than any American brand that I can think of.
20 posted on 07/05/2002 9:16:20 AM PDT by newcats
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