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November 11, 2007

Cig taxes: an inconvenient truth

Congress wants to tax cigarettes to fund SCHIP services. Oregon voters recently shot down a hefty proposed cig tax, but we're far from the only state to tax cigarettes to pay for a variety of programs.

Tobacco taxes aren't the cost-free source of funding that many citizens think. Higher taxes give rise to organized crime smuggling cigarettes in California, Oregon (.pdf warning), New York and elsewhere. In fact all over North America, including Canada which levies massive taxes on tobacco products, England, Russia and elsewhere.

New York City has been struggling with cigarette tax-fueled organized crime for over 50 years (.pdf warning).

Perhaps worse than the diversion of money has been the crime associated with the city's illegal cigarette market. Smalltime crooks and organized crime have engaged in murder, kidnapping and armed robbery to earn and protect their illicit profits. Such crime has exposed average citizens, such as truck drivers and retail store clerks, to violence.

One would think that Americans would have learned from alcohol prohibition that trying to outlaw popular products, now matter how well intentioned the motives or how unhealthy the habit might be, that it would lead to epidemics of crime. High taxes do the same thing just to a lesser degree. Either approach creates huge profit motives for unsavory characters. And it's worth noting here that while the A in ATF stands for Alcohol, the T stands for Tobacco... for a good reason!

Worse, high cigarette tax schemes are increasingly leading to international terrorist organizations turning to the cigarette black market as a way to raise illicit funds for themselves.

We plug along with a so-called "War on Drugs" while organized crime gangs get richer and more violent every passing year. Tactics of outlawing popular vices simply don't work in a free society. They inevitably lead to organized crime which leads to over-crowded prisons which leads to higher taxes or fees of one form or another to pay for it all and to pay for the law enforcement structure with which to ineffectively attempt to enforce such counter-productive approaches to forcably reducing "sin" in America.

Touting cig taxes as an easy means of funding health care for kids, whether that be just here in Oregon (M50) or in the whole country (SCHIP), without also discussing the increased crime that we know is going to be associated with it is dishonest and ultimately a disservice to every citizen.

Posted by Kevin at November 11, 2007 10:38 AM