Cigarette Smuggling Makes Nanny State Taxes Go Up in Smoke

The state of Washington has a smuggling problem,
exacerbated by a large tax gap with its neighbors.

The state’s tax on cigarettes is $3.02 a pack, compared to
$1.18 in Oregon and 57 cents in Idaho. In the border
cities of Washington, the ease of hopping the state line for
cheaper smokes is just too tempting for some.

Washington’s Department of Revenue estimates the state lost
about $376
million
 in tax revenue in 2012 to cigarette tax evasion.
An estimated 35 percent of the cigarettes in Washington are
contraband.

So who is doing it and how are they getting away with it?

Take Spokane, where officers of the Washington State
Liquor Control Board recently busted two shops for selling
cigarettes without the Washington tax stamp.

Lt. Rod Mittman of the liquor board’s enforcement
division explained to Northwest Watchdog the process used
by two stores that recently got caught selling smuggled
cigarettes.

Step 1: Drive 20 miles to Idaho

Step 2: Buy 444 packs of cigarettes (the number of
cigarette cartons confiscated by liquor control board officers)

Step 3: Remove Idaho state tax stamp

Step 4: Sell cigarettes tax free, in the open, as if
nothing were amiss (“It was all out in the open,” Mittman said)

Step 5: This step depends on the luck of the store: you
either get away with it or you don’t.

In the case of Bongs Grocery and Deli and
the Super C Store, a citizen complained, leading to an
investigation and criminal citation and confiscation of the
smuggled cigarettes. Stores that smuggle cigarettes also risk
losing their administrative license to sell tobacco, Mittman
said.

Representatives from Bongs and Super C could not be reached for
comment.

High cigarette taxes, intended to discourage the unhealthy habit
and raise state revenue, have created a black
market
 for cigarette sales across the country — from
people sneaking cartons from states with lower taxes to a
crime-plagued industry fueled by an influx of international
cigarettes costing as little as 20 cents per pack.

A study by the Mackinac Center

You can read the rest of this article at: http://reason.com/archives/2013/07/20/cigarette-smuggling-makes-wa-tax-revenue

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>