Late last month, state legislators and Governor David Paterson jacked up the state’s cigarette tax by 83 percent – from $1.50 per pack to $2.75. By the way, New York City adds its own tax of $1.50. That’s a total per pack cigarette tax in New York City of $4.25.
That’s a big economic hit for consumers and small businesses. But the bad news doesn’t stop there.
As Patrick Fleenor reports in a May 7 Wall Street Journal op-ed, New York has long been out front in jacking up tobacco taxes. The result has been a boon for the bad guys. The only thing that has changed lately is who the bad guys are.
Consider the following written by Fleenor:
As the Bureau of Alcohol, Tobacco and Firearms said in September 2002 of New York's cigarette smuggling, "Traditional organized crime is involved, terrorist groups are involved, and street gangs are involved." Rivalry among these groups has resulted in numerous shootings and homicides.
The connection to terrorism is no exaggeration. When New York police cracked another smuggling ring in 2005, they uncovered a multimillion dollar flow of funds from New York City to unknown individuals in the Middle East. Police Commissioner Raymond Kelly gave voice to the obvious conclusion: Terrorists probably got the money.
Just a few weeks before that 2005 bust, Buffalo-area businessman Aref Ahmed had been sentenced to three years and a month for cigarette smuggling. The feds said he'd used the racket to fund "scholarships" at terrorist training camps in Afghanistan during the spring of 2001. Going back to 1993, counterfeit cigarette stamps were found in the apartment of the first World Trade Center bombers….
In the 1960s and '70s, organized crime exploited high cigarette taxes at our expense. Today we face an even deadlier adversary.
Not only do lawmakers fail to grasp or choose to ignore the negative economics of their taxing policies, but they fail to consider even more grave consequences.