Newsbrief:
NYC
Cigarette
Tax
Hike
Leads
to
Black
Market
Violence
12/12/03
Welcome to the drug wars, Mr. Butts. New York City's black market cigarette business turned violent this week, with two people killed and two others shot in separate attacks linked to turf wars over prime sales locations, the New York Post reported Wednesday. The violence comes amidst a surge in cigarette bootlegging since the city increased its cigarette tax from 8 cents per pack to $1.50 per pack in June of last year -- a whopping 1,900% increase. As a result of the tax increase, cigarette smuggling has gone through the roof. By purchasing smokes in tobacco-friendly states such as Kentucky and North Carolina, bootlegging entrepreneurs can make a profit of as much as $50 per carton. With profit margins like that, a single van load of Kools or Winstons can be worth tens of thousands of dollars once the smokes are sold on the street corners and bodegas of the city. Such profits are attracting criminal gangs, New York police and federal officials said. Among those mentioned by authorities are Russian mobsters, Chinatown gangs, and Arabs with ties to Hezbollah, a Lebanese militia facilely labeled a "terrorist group." "You can liken this to narcotics trafficking; there are people who buy in bulk, then break it down and distribute to stores or to street dealers who sell them by the cigarette," said Garry McCarthy, the NYPD's deputy commissioner for operations. Naturally, the police are ready to confront this new menace. NYPD has created a special unit, the Cigarette Interdiction Group (CIG—get it?) to go after the black market trade. These new Untouchables have so far made 146 arrests, seized six cars, $250,000 in cash, and 30,000 cartons of cigarettes. Those figures do not include the more than one thousand cigarette-related arrests made by patrol cops since the tax took effect last year. According to Patrick Fleenor, author of "Cigarette Taxes, Black Markets, and Crime: Lessons from New York's 50-Year Losing Battle," efforts to suppress behaviors through excessively punitive taxation always yield such unanticipated yet predictable results. "Since the first state cigarette taxes were imposed in the 1920s, black markets and related criminal activity have plagued high-tax jurisdictions. Such activity has proven to be resistant to law enforcement curtailment efforts," wrote Fleenor. "The negative side effects of high cigarette taxes in New York provide a cautionary tale that high tax rates have serious consequences -- even for such a politically unpopular product as cigarettes."
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