News / USA

US States Target Black Market Cigarette Sales

Smuggling costs billions of dollars in lost tax revenues

A truckload of black market cigarettes could be worth $2 million in profits for smugglers.
A truckload of black market cigarettes could be worth $2 million in profits for smugglers.

Multimedia

Audio
Faiza Elmasry

Lawmakers across the U.S. have raised taxes on cigarettes to provide local governments with much needed funds.

But a thriving black market in cigarettes is costing governments billions of dollars a year in lost revenue. That's prompted agencies at all levels to join an effort to fight cigarette trafficking.

Price of a smoke

The price of a smoke varies widely across the United States, because each state sets the tax imposed on the retail sale of a pack of cigarettes.

In some states, it's a few cents. In others, it's several dollars. So, with 45 million American smokers, cigarettes are big business.

So is cigarette smuggling.

Smugglers stock up on cigarettes in low-tax states or buy them tax-free on Indian reservations. Then they transport them to states where the price of a pack is higher. The higher the tax in the state where the smugglers unload the cigarettes, the greater the profit.

Huge profits

"Right now a tractor-trailer load of illegal cigarettes will net the truck driver about $2 million in profit," says Ted Deeds, spokesman for the Law Enforcement Alliance of America, a private law-and-order advocacy group.

Deeds points out that profits for the smugglers mean uncollected taxes for the states, money that's needed to fund local services, especially education.

"The Wall Street Journal has reported that the individual states are losing approximately $5 billion annually, simply from the lost taxes caused by the illegal cigarette black market," he adds.

Cigarette taxes are a vital revenue source for New York State, which has the highest-priced cigarettes in the nation - almost $15 a pack.

State taxes make up more than $4 of the cost. New York City tacks on an extra levy of $1.50. The state is collaborating with the federal Bureau of Alcohol, Tobacco, Firearms and Explosives, known as the ATF, in cracking down on the cigarette black market.

Cracking down

Brad Maione, with New York's Department of Taxation and Finance, says the agencies have been conducting long-term undercover investigations.

"This work is dangerous, difficult and involves out-of-state operations," he says. "We've been relatively successful over the years in fighting bootlegging. We did a case in March that resulted in numerous arrests. That was about $11 million in tax-loss for the state."

"ATF, you know, worked literally on hundreds of cases across the country in recent years," says Jeff Cohen, an ATF spokesperson. "One of our more noted success was a case a couple of years back involving a Hezbollah terror cell in North Carolina that was transporting cigarettes to the State of Michigan and making a great deal of money on the untaxed cigarettes and then was using the money to basically buy military equipment."

In spite of many successes, Cohen says, fighting cigarette smugglers is becoming more difficult.

"One of the major problems around the world is the manufacturing and distribution of counterfeit cigarettes," he explains. "In recent years, these companies have become much more sophisticated, up to the point where it's impossible to tell the difference between the counterfeit cigarettes and the actual cigarettes."

And, he says, law enforcement's efforts are often hindered by a lack of resources - and other priorities.

Sophisticated smugglers

"In particularly, at ATF, we focus primarily on violent crimes," says Cohen. "When you have people who are trafficking firearms or engaged in blowing up buildings, or engaged in drug trafficking, sometimes cigarette trafficking is not considered a high priority. The other thing is that criminals are very clever. They often insulate themselves by having many different transactions in between where cigarettes are ultimately sold."

Raising public awareness about this crime is essential to stopping it, according to the Law Enforcement Alliance of America's Ted Deeds.

"America's police need to do a better job letting everybody in America know there is a black market," Deeds says. "And every person in America needs to make better choices and obviously not to buy it. And if they see somebody selling stolen [items] out of the back of a truck, call local law enforcement and report that. Second, law enforcement has to have a seat at the table when we talk about what to do next. Maybe we secure the border. Maybe we increase the penalty. Maybe we decrease the profitability."

Deeds says developing more cooperation among various federal and local agencies can help combat smuggling. And he adds that it would be useful for U.S. law enforcement officials to coordinate with foreign agencies and governments, since cigarette smuggling has increasingly become a crime with no borders.

You May Like

Australia Knights Prince Philip, Sparking National Outrage

Abbott's surprise reintroduction of knights and dames in the country's honors system last year drew criticism that he was out of touch with national sentiment More

SAG Award Boosts 'Birdman' Oscar Hopes

Individual acting Oscars appear to be sewn up: SAG awards went to artists who won Golden Globes: Julianne Moore, Eddie Redmayne, Patricia Arquette, J.K. Simmons More

Katy Perry Lights Way for Super Bowl's Girl Power Moment

Pop star's selection to headline US football championship's halftime show extends NFL's trend of selecting artists who appeal to younger viewers More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Zoo Animals Show Their Artistic Sidesi
X
June Soh
January 23, 2015 10:03 PM
The pursuit of happiness is so important, America's founding fathers put it in the Declaration of Independence. Any zookeeper will tell you animals need enrichment, just like humans do. So painting, and even music, are part of the Smithsonian National Zoo's program to keep the animals happy. VOA’s June Soh met some animal artists at the zoo in Washington. Faith Lapidus narrates.
Video

Video Zoo Animals Show Their Artistic Sides

The pursuit of happiness is so important, America's founding fathers put it in the Declaration of Independence. Any zookeeper will tell you animals need enrichment, just like humans do. So painting, and even music, are part of the Smithsonian National Zoo's program to keep the animals happy. VOA’s June Soh met some animal artists at the zoo in Washington. Faith Lapidus narrates.
Video

Video Progress, Some Areas of Disagreement in Cuba Talks

U.S. and Cuban officials are reporting progress from initial talks in Havana on re-establishing diplomatic ties. U.S. Assistant Secretary of State (for Western Hemisphere Affairs) Roberta Jacobson said while there was agreement on a broad range of issues, there also are some “profound disagreements” between Washington and Havana. VOA State Department correspondent Pam Dockins has the story.
Video

Video Worldwide Photo Workshops Empower Youth

Last September, 20 young adults from South Sudan took part in a National Geographic Photo Camp. They are among hundreds of students from around the world who have learned how to use a camera to tell the stories of the people in their communities through the powerful medium of photography. Three camp participants talked about their experiences recently on a visit to Washington. VOA’s Julie Taboh reports.
Video

Video US, Japan Offer Lessons as Eurozone Launches Huge Stimulus

The Euro currency has fallen sharply after the European Central Bank announced a bigger-than-expected $67 billion-a-month quantitative easing program Thursday - commonly seen as a form of printing new money. Henry Ridgwell reports for VOA from London on whether the move might rescue the eurozone economy -- and what lessons have been learned from similar programs around the world.
Video

Video Nigerian Elections Pose Concern of Potential Conflict in 'Middle Belt'

Nigeria’s north-central state of Kaduna has long been the site of fighting between Muslims and Christians as well as between people of different ethnic groups. As the February elections approach, community and religious leaders are making plans they hope will keep the streets calm after results are announced. Chris Stein reports from the state capital, Kaduna.
Video

Video As Viewership Drops, Obama Puts His Message on YouTube

Ratings reports show President Obama’s State of the Union address this week drew the lowest number of viewers for this annual speech in 15 years. White House officials anticipated this, and the president has decided to take a non-traditional approach to getting his message out. VOA White House correspondent Luis Ramirez reports.
Video

Video S. Korean Businesses Want to End Trade Restrictions With North

Business leaders in South Korea are calling for President Park Geun-hye to ease trade restrictions with North Korea that were put in place in 2010 after the sinking of a South Korean warship.Pro-business groups argue that expanding trade and investment is not only good for business, it is also good for long-term regional peace and security. VOA’s Brian Padden reports.
Video

Video US Marching Bands Grow Into a Show of Their Own

The 2014 Super Bowl halftime show was the most-watched in history - attracting an estimated 115 million viewers. That event featured pop star Bruno Mars. But the halftime show tradition started with marching bands, which still dominate the entertainment at U.S. high school and college American football games. But as Enming Liu reports in this story narrated by Adrianna Zhang, marching bands have grown into a show of their own.

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

All About America

AppleAndroid