While it's politically popular to impose confiscatory taxes on
America's 40 million tobacco smokers, there are a number of
consequences one might consider, but let's start out with a quiz.
a carton of cigarettes sells for $160 in New York City, and $35 in
North Carolina, what do you predict will happen? If you answered tons
of cigarettes will be going up I-95 from North Carolina to New York
City, go to the head of the class.
Smuggling cigarettes is
illegal; so the next quiz question is: Who is most likely to engage in
cigarette smuggling? It's a mixed answer, but for the most part,
organized smugglers will be people with a high disregard for the law.
The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) has found
that Russian, Armenian, Ukrainian, Chinese, Taiwanese and Middle
Eastern (mainly Pakistani, Lebanese and Syrian) organized crime groups
are highly involved in the trafficking of contraband and counterfeit
cigarettes. What's worse is the ATF found some of these groups use the
money to provide material financial assistance to terrorist groups such
as Hezbollah and Hamas.
Some smugglers are good people who
differ little from the Founders of our nation such as John Hancock,
whose flamboyant signature graces our Declaration of Independence. The
British had levied confiscatory taxes on molasses, and John Hancock
smuggled an estimated 1.5 million gallons a year. His smuggling
practices financed much of the resistance to British authority — so
much so that the joke of the time was that "Sam Adams writes the
letters [to newspapers] and John Hancock pays the postage." Like
Hancock, some of today's cigarette smugglers are providing a service to
their fellow man caught in the grip of confiscatory taxation.
my book, the Hancock-type smuggler is a hero of sorts. Let's look at
it. During the days of the Soviet Union, Swiss watches were illegal.
During our Prohibition era, the sale, manufacture and the importation
of intoxicating liquor was illegal. Britain's Navigation Acts imposed
high tariffs and restrictions on goods sold to the American Colonies
that ultimately led to our 1776 War of Independence. The common theme
in all of these acts is government seeking to interfere with, regulate
or outlaw peaceable voluntary exchange between individuals.
me what's wrong in people wanting to wear a Swiss watch, have a drink,
purchase tea from a Dutch rather than an English seller or cheap
cigarettes from North Carolina rather than expensive ones from New
York. People in government or those in pursuit of a do-good agenda
think they know better and think they have a right to use government's
brute force to hinder peaceable voluntary exchange.
my hero the smuggler to the rescue. He is the guy who, in effect, tells
us, "I know the government wants to interfere with your consumption of
booze, tobacco, or tea, but I can get a deal for you." He might have to
run clandestine operations, blackmail and corrupt public officials, but
at least you get the item, if it has been prohibited, and for a lower
price if it has been confiscatorily taxed.
The smuggler who
uses the proceeds to finance destructive activity is not my hero, but
that is not an argument against smuggling itself any more than it would
be an argument against the practice of medicine if some practitioners
used their earnings to finance terrorist activities.
The easy solution to cigarette smuggling, and its attendant activities,
is to eliminate the confiscatory taxes. Unfortunately, for politicians
and do-gooders, the attack on smokers is a moral crusade that sees only
benefits and costs are irrelevant. Or as novelist C.S. Lewis put it,
"Of all tyrannies a tyranny sincerely exercised for the good of its
victims may be the most oppressive."