-By Warner Todd Huston
Indiana’s cigarette tax is relatively low. Chicago has been complaining for some time that people will go to the Hoosier State, buy a few cartons, then come back to Chicago and sell them at prices undercutting Illinois rates, but still make money. Kentucky, though its tax isn’t too high, also finds its citizens crossing into Indiana to buy their tobacco to sell them cheaper back home. It’s called the black market and high tobacco taxes foster this criminal enterprise.
Now California wants to hike taxes to some of the highest rates in the country.
Democrat State Senator Kevin De Leon has introduced a plan to hike cigarette taxes (SB 768 ) in order to pay for more state spending. But this idea is nothing new and has been defeated several times before. Even law enforcement has been against these tax hikes because such plans embolden dangerous criminals
States with high tobacco taxes like New York have reported higher levels of black-market smuggling, a big source of money for gangs and organized crime. By one 2011 estimate three of every five cigarettes smoked in the Empire State was purchased illegally.
Increasing tobacco taxes in California–especially at the extreme rate proposed by De Leon–will bring the same type of crime as that experienced in New York.
But this question has been dealt with by law enforcement in California in the past.
Law enforcement has identified trafficking of black market cigarette sales as a growing problem that costs California hundreds of millions a year in lost tax revenues which is one of the reasons why the LA Deputy Sheriffs opposed higher cigarette taxes in the past.
Increasing the tobacco tax hurts local, family-owned small businesses, as well, as they lose business to illegal sales activity. Some Californians have banded together to fight the tax hikes.
Additionally, the two-dollar-a-pack tax is opposed by taxpayer groups who say the $1.4 billion dollars in new cigarette tax revenue can be spent on almost anything–including higher government employee salaries and benefits–not tobacco prevention and health programs as required in the past.
Of course, Indiana has the right idea, here. That its laws impact crime in other states is certainly not Indiana’s problem!