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

Photogallery Early Nigeria Results Show Buhari Leading; Tampering Concerns Mount

One local group monitoring polls is concerned politicians might use security agencies to 'fiddle with the election collation process' at state level More

UN: 7,300 Civilians Killed in Boko Haram Insurgency

A senior UN humanitarian official tells the United Nations Security Council 1,000 people have been killed this year More

Turkish President Warns Iran About Trying to Dominate Middle East

Warning comes amid growing concerns inside Turkey that it will be sucked into a sectarian conflict with its neighbor 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.
Film Tells Story of Musicians in Mali Threatened by Jihadistsi
X
Greg Flakus
March 30, 2015 6:48 PM
At this year's annual South by Southwest film and music festival in Austin, Texas, some musicians from Mali were on hand to promote a film about how their lives were upturned by jihadists who destroyed ancient treasures in the city of Timbuktu and prohibited anyone from playing music under threat of death. As VOA’s Greg Flakus reports from Austin, some are afraid to return to their hometowns even though the jihadists are no longer in control there.
Video

Video Film Tells Story of Musicians in Mali Threatened by Jihadists

At this year's annual South by Southwest film and music festival in Austin, Texas, some musicians from Mali were on hand to promote a film about how their lives were upturned by jihadists who destroyed ancient treasures in the city of Timbuktu and prohibited anyone from playing music under threat of death. As VOA’s Greg Flakus reports from Austin, some are afraid to return to their hometowns even though the jihadists are no longer in control there.
Video

Video With Coalition Airstrikes, Iraq Entering 'Last Page' of IS Battle

American warplanes joined Iraq's battle against the so-called 'Islamic State' in northern Iraq late Wednesday, as Iraqi ground troops launched a massive assault on Tikrit. Analysts say the offensive could take the coalition a step further towards Mosul, the largest city held by Islamic State forces. Others say it could also deepen already-dangerous sectarian tensions in the region. VOA's Heather Murdock has more from Cairo.
Video

Video Philippines Wants Tourists Spending Money at New Casinos

Tourism is a multi-billion dollar industry in the Philippines. Close to five million foreign visitors traveled there last year, perhaps lured by the country’s tropical beaches. But Jason Strother reports from Manila that the country hopes to entice more travelers to stay indoors and spend money inside new casinos.
Video

Video Civilian Casualties Push Men to Join Rebels in Ukraine

The continued fighting in eastern Ukraine and the shelling of civilian neighborhoods seem to be pushing more men to join the separatist fighters. Many of the new recruits are residents of Ukraine made bitter by new grievances, as well as old. VOA's Patrick Wells reports.
Video

Video Islamic State Prisoners Talk of Curiosity, God, Regret

Islamic State fighter, a prisoner of Kurdish YPG forces, asked his family asking for forgiveness: "I destroyed myself and I destroyed them along with me." The Syrian youth was one of two detainees who spoke to VOA’s Kurdish Service about the path they chose; their names have been changed and identifying details obscured. VOA's Zana Omer reports.
Video

Video Germanwings Findings Raise Issue of Psychological Testing for Pilots

More is being discovered about the co-pilot in the crash of Germanwings Flight 9525 in the French Alps. Investigators say he was hiding a medical condition, raising questions about the mental qualifications of pilots. VOA's Carolyn Presutti reports.
Video

Video Hi-tech Motorbike Helmet's Goal: Improve Road Safety

In cities with heavily congested traffic, people can get around much faster on a motorcycle than in a car. But a rider who is not sure of his route may have to stop to look at the map or consult a GPS. A Russian start-up company is working to make navigation easier for motorcyclists. Designers at Moscow-based LiveMap are developing a smart helmet with a built-in navigation system, head-mounted display and voice recognition. Zlatica Hoke has more.
Video

Video DOJ: Illinois National Guard Soldier Tried to Join ISIS

U.S. federal law enforcement agents arrested two suburban Chicago men accused of trying to join ISIS overseas, while also plotting attacks in the United States. As VOA’s Kane Farabaugh reports from the Midwest state of Illinois, one of those arrested is a soldier of the Illinois National Guard.
Video

Video New Wheelchair Is Easier to Use, Increases Mobility

Traditional push-rim wheelchairs create a lot of stress for arm, shoulder and neck muscles and joints. A redesigned chair, based on readily available bicycle technology, radically increases mobility while reducing the physical effort. VOA’s George Putic reports.
Video

Video Liberia's Almost Last Ebola Patient Grateful but Still Grieving

Beatrice Yardolo was to make history as Liberia’s last Ebola patient. Liberians recently started counting down 42 days, the period that has to go by without a single new infection until the World Health Organization can declare a country Ebola-free. That countdown stopped on March 20 when there was another new case of Ebola, making Yardolo’s story a reminder that Ebola is far from over. Benno Muchler reports from Monrovia.
Video

Video Cambodian Land Grabs Threaten Traditional Communities

Indigenous communities in Cambodia's Ratanakiri province say the government’s economic land concession policy is taking away their land and traditional way of life, making many fear that their identity will soon be lost. Local authorities, though, have denied this is the case. VOA's Say Mony went to investigate and filed this report, narrated by Colin Lovett.
Video

Video Space Program Status Disappoints 'Last Man on the Moon'

One of the films that drew big crowds last week at the annual South by Southwest festival in Austin, Texas, tells the story of the last human being to stand on the moon, U.S. astronaut Eugene Cernan. It has been 42 years since Cernan returned from the moon and he laments that no one else has gone there since. VOA’s Greg Flakus reports.

VOA Blogs

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