Cigarette black market emerges in Texas

[burnthebeautiful]

We knew it was only a matter of time before cigarette taxes became so high that smuggling would begin. In Texas, there's now a black market for cigarettes, complete with cigarette smuggling and low-quality tobacco being passed off as high-quality... A bureaucrat reports there's now just as much profit, if not more, in black market cigarettes as there is in illegal drugs...

http://www.mysanantonio.com/news/metro/stories/MYSA021207.cigaretteblackmarket.KENS_.79b0f357.html

Cigarette black market begins to emerge

Web Posted: 02/13/2007 01:10 AM CST

Angela Kocherga
KENS 5 Eyewitness News

The new tax on cigarettes is supposed to make $700 million for the state of Texas a year.

Smugglers along the border are stealing some of those cigarette tax dollars by offering smokers a cheaper alternative.

Sales have tripled at a cigarette store in Southern New Mexico.

Driving to New Mexico to save $8 a carton is worth it for some Texans, said Cigarette Outlet sales clerk Zach Colcord.

Across the border in Mexico, street vender's peddle packs of cigarettes for half the price of smokes in Texas.

And more and more these days, lots of customers try to avoid the sales tax hike by sneaking their stash across the border and bypassing the booths set up by the state of Texas to collect taxes.

Determined smugglers know the booths are closed at midnight and reopen in the morning.

If the experience on the other border with Canada is any indication: cigarette smuggling could skyrocket along the southern border.

"I think if the price got high enough, they'd definitely develop a black market for them," said Texas smoker Travis Salazar.

One method already being used in Mexico is known as "trafico hormiga," like an army of ants, smugglers carry small amounts of contraband across the border hidden in cars.

Immigration and Customs Enforcement report some international rings traffic large shipments.

"It's the same, if not more, profit in cigarettes than narcotics," said David Regalado of ICE.

Investigators on the largest illegal cigarette case of its kind in U.S. history uncovered another danger: counterfeit smokes. The ring was based in El Paso, but supply lines stretched to China. The boxes and boxes of cigarettes with brand names were all fakes. Five men wanted in that case are still on the run.

Others were cigarettes made by the manufacturer but only for sale abroad.

"They'll show us the Mexican document indicating it went south when in reality he bought that document in Mexico," Regalado said.

Smugglers use the fake documents to hide the fact that the cigarettes stay in the U.S. tax free.

"It's happening everywhere. And ever since that case, more cases have been opened up all over the border and in Canada as well," Regalado said.

In Texas, where more smokers are searching for a lower cost way to satisfy their craving, some authorities are bracing for a surge in black market cigarettes.

[Pat K]

Gee, there was no way you could see this coming.

[Pat McCotter]

TobaccoFreeKids.org
RAISING STATE CIGARETTE TAXES ALWAYS INCREASES STATE REVENUES
(AND ALWAYS REDUCES SMOKING)

Every single state that has significantly raised its cigarette tax rate has enjoyed substantial increases to state revenues, despite the fact that cigarette tax increases reduce state smoking levels and despite any related increases in cigarette smuggling or cigarette tax avoidance. Put simply, the increased tax per pack brings in far more new state revenue than is lost through the related reductions in the number of packs sold and taxed in the state.
...

[Pat McCotter]

Center for Policy Alternatives
(Of, by and for state legislators)

States that have increased tobacco taxes have had only minor problems with cigarette smuggling and tax evasion.
All major studies have shown that smuggling and tax avoidance are relatively insignificant problems. Cigarette smuggling, cross-border cigarette purchases, and Internet sales account for not more than five to ten percent of all cigarette sales.³ A California study found that after the state?s 50-cent cigarette tax increase went into effect in 1999, fewer than five percent of all continuing smokers were avoiding the state?s cigarette tax.⁴ It is also worth noting that the smuggling and tax avoidance that followed New York?s 55-cent tax increase in 2000 did not discourage the state from adding another 39 cents in 2002, bringing the tax to $1.50 per pack?nor did it prevent New York City?s eight cent supplementary local cigarette tax increase to $1.50 per pack the same year.

3. Matthew Farelly, ?State Cigarette Excise Taxes: Implications for Revenue and Tax Evasion,? RTI International, 2003; Yurekli and Zhang, ?The Impact of Clean Indoor-Air Laws and Cigarette Smuggling on Demand for Cigarettes: An Empirical Model,? Health Economics, 2000.

4. Sherry Emery, ?Was there significant tax evasion after the 1999 50 cent per pack cigarette tax increase in California?,? Tobacco Control, June 2002.

[aries]

They have a sales tax booth at the border? WTF

Vermont doesnt have anything like that. Shopping in Canada is totally tax free for Americans

[error]

Damn "news" state apologists.

Smugglers along the border are stealing some of those cigarette tax dollars by offering smokers a cheaper alternative.

Smugglers aren't stealing anything. The STATE OF TEXAS IS DOING THE STEALING.