Cigarette Taxes Help the Mob

Discussion
May 09, 2003
George Anderson

By George Anderson


Lorillard Tobacco launched an ad campaign on Wednesday in Delaware, New Jersey and Pennsylvania claiming higher taxes on cigarettes is putting money into the pockets of gangsters. The three states are currently considering increasing cigarette taxes.


The “No Tax, No Crime” campaign focuses on the New York City experience with higher cigarette taxes. A pack of tier 1 cigarettes sold in any of New York’s five boroughs costs approximately $7.


Bob Shepherd, a former New York state deputy tax commissioner and a spokesperson
for Lorillard’s campaign said in a released statement, “There are examples and
cases brought forth every day related to illegal sales to minors, illegal tax
stamps, counterfeit product, and seizures of hundreds of thousands of cartons
of illegally smuggled cigarettes — all of which has increased after New York
hiked its taxes. It does not take a genius to figure out the outrageous profits
that can be made by driving a short distance, buying cigarettes at more than
half the price, then smuggling them into the Northeast. This is a problem that
has besieged an already stressed New York law enforcement system, and the problem
will only get worse. Simply, using tax policy to punish a certain segment of
our population only helps those people who want to break laws — and ultimately,
everyone pays for it.”



Moderator’s Comment: What has the been the impact of
so-called “sin taxes” on consumer behavior, retailing and government?


Firstly, we understand Lorillard has a vested interest
in lower cigarette taxes. There is a correlation between price and the numbers
of smokers. That’s why it doesn’t take a genius to figure out consumers will
buy cigarettes wherever they can get them at the lowest price. For some, that
means purchasing illegally smuggled product. For others, it may mean stocking
up at a store on a Native American reservation or bringing cartons back from
a vacation in Virginia.


Sin taxes have never been a good idea and they never will.
[George
Anderson – Moderator
]

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