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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. If 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
that 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.
In 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.
Tell me what's wrong in people wanting to wear a Swiss watch,
having a drink, purchasing tea from a Dutch seller 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.
In comes my hero the smuggler to the rescue. He's 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 the
smuggling itself anymore than it would be an argument against the
practice of medicine if some medical 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."
Walter Williams is a professor of economics at George Mason University. |