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Liberty: -- Issues -- Bootlegging and violence

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  • Marc Brands Liberty
    Nicotine Fights By Jacob Sultum Increasing the Cigarette tax saves lives, New York Mayor Michael Bloomberg declared last year while pushing 19-fold increase
    Message 1 of 1 , May 1, 2003
      Nicotine Fights

      By Jacob Sultum

      "Increasing the Cigarette tax saves lives," New York Mayor Michael
      Bloomberg declared last year while pushing 19-fold increase in the
      city's levy. To the contrary, suggests a recent report from the Cato
      Institute: Increasing the cigarette tax can be deadly.

      In July the combined state and local cigarette tax in New York City
      hit $3 a pack, the highest in the country. Patrick Fleenor, former
      chief economist at the Tax Foundation, argues that the steep hike is
      bound to promote the sort of black market activity that has been
      associated with violence in the past.

      During die first four months after the tax hike, according to official
      figures, cigarette sales in the city fell by 50percent compared to the
      same period in 2001. But that doesn't mean New York has half as many
      smokers as it did before Bloomberg came to their rescue. The official
      figures do not reflect border shopping (which nowadays includes online
      sales as well as purchases in other states) or bootlegging.

      As Fleenor shows, New York has a long, bloody history of cigarette
      bootlegging, with smugglers fighting among themselves, hijacking
      trucks, and robbing dealers. "The enormous profits that can be made
      smuggling cigarettes into New York have lured smalltime crooks,
      mobsters, street gangs, and terrorists into the racket," he writes.

      "Those criminals have engaged in a host of violent activities,
      including murder, kidnapping, and armed robbery, to earn and protect
      their illicit profits .... If history is any guide, the involvement of
      several rival groups in large-scale cigarette smuggling operations
      that also face competition from small-scale bootleggers creates a very
      volatile situation."

      If you think Fleenor's warnings are overwrought, consider what New
      York Gov. Malcolm Wilson said in 9974. "One major incentive to
      organized crime." he observed, "is the high New York City cigarette
      taxes, piled on top of the state tax, which have made that city the
      promised land for cigarette bootleggers." Taking inflation into
      account, the tax when Wilson spoke was less than half what it is now.


      -----
      Source: Reason 5.03


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