Tax increase boosts crime

Today’s lesson is about excessive taxation on cigarettes and how that encourages crime. It’s brought to you by co-sponsors New York State and New York City. Each, acting unilaterally, has hiked cigarette taxes so high that the average smoker will be paying about $9 a pack for legal cigarettes in Manhattan by July 1 when another $1.25 per pack tax is tacked on.

The reality is, however, that more bootlegged cigarettes from Virginia will find their way to New York State this summer. How do we forecast this? History.

By the mid-1960s, after a series of tax increases in the Big Apple and the Empire State, some 25 percent of the cigarettes bought in New York were bootlegged. By the 1970s, as cigarette smuggling became a chief source of revenues for organized crime, a state commission investigating the problem had the temerity to propose to abolish the excise tax on smokes.

That suggestion was even backed by the governor at the time. Malcolm Wilson stated then that “One major incentive to organized crime 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.” Of course, no one in authority in the city paid any attention to the governor.

By the turn of the century, the federal Bureau of Alcohol Tobacco and Firearms was reporting that “traditional organized crime is involved, terrorist groups are involved and street gangs are involved…” in cigarette smuggling. Along with this comes the expectable mayhem, complete with shootings and killing. The Wall Street Journal reported recently that in 2005, a Buffalo area businessman was sentenced to the slammer for a cigarette smuggling operation that funded “scholarships” for terrorist training camps in Afghanistan during ‘01.

The lesson in all of this should be clear after nearly half a century. Tax policy on cigarettes can be hazardous to the general public’s safety.

Sanctimonious politicians who seek ever-higher taxes to discourage a health-threatening substance are instead encouraging criminal activity that costs New Yorkers and all of us in more ways than just more revenues for law enforcement.