Earlier today, I came across a piece from the Campaign for Tobacco Free Kids (CTFK) written in 2000. It essentially argues that high taxes do not lead to illegal cigarette smuggling, and that a black market for tobacco should not be a concern. It is not only incorrect, but grossly underestimates the adverse impact of tobacco smuggling on government and society.
Smuggling is bad for a number of reasons. While I am not keen to bemoan a loss of government revenue, tax evasion presents a problem for politicians who have tied expected revenue to ongoing spending priorities. When illegal cigarettes are sold at a discount, the government collects no tax at all. Perhaps more importantly is the threat of violence that comes with massive smuggling rings. People die as a result of the illegal cigarette trade just as they do as a result of drug and human trafficking. Tobacco smuggling has also been found to directly finance terrorism.
The problem is, organizations like the CTFK don’t even believe the possibility of smuggling. This is because they are too busy lobbying for tax increases to read the news. In 2000, CTFK put out a release titled “Increasing Federal Cigarette Taxes Will Not Create a Black Market in the United States.” The ten talking points they provide are comical. I’ll highlight a few:
Even if U.S. smokers were willing to purchase cigarettes in Mexico or Canada to try to escape higher federal cigarette taxes, over 90 percent of the U.S. population lives so far away from either of the borders that crossing into Mexico or Canada to buy cigarettes simply would not be worth the time or trouble.
First of all, I want to commend CTFK for the gall with which they fabricate statistics. How, exactly, does one determine that 90 percent of the U.S. population lives too far away from the border to want to make money? Was there polling on this?
Second, arguing that smuggling is “not worth the time or trouble” ignores how lucrative the practice can be. It’s already a multi-million dollar industry in New York.
The cigarette companies and their supporters have claimed that sharp increases in U.S. cigarette prices would cause the United States to be “flooded” with cheap black market cigarettes smuggled from China and elsewhere. But U.S. smokers have consistently rejected foreign brands of cigarettes – even when they are the same quality as U.S. brands, cheaper, and legally available – and counterfeit U.S. brands have never been accepted.
Again, applause for the use of anecdotal evidence. But the facts don’t exactly bear this out. In Canada, much of the smuggling involved Canadian tobacco companies exporting their product to purchasers in the United States, who then would sneak it across the border and re-sell it for a profit.
Because of the U.S. war against illicit drugs and illegal immigrants, the U.S. border with Mexico is among the most closely supervised and heavily policed in the world, making both organized and informal smuggling of cigarettes from Mexico into the U.S. more difficult, risky, and costly.
This is perhaps the most preposterous thing I have read in print to date. The Campaign for Tobacco Free Kids is arguing that because the U.S. government is doing such a phenomenal job cracking down on drug trafficking and illegal immigration, there is no way that illegal cigarettes will make their way into the country.
They sort of gloss over the fact that there are 11 million illegal immigrants, 770 metric tons of cocaine, and countless exotic tigers in the United States right now. (To clarify: ATR’s position on immigration and free trade does not necessarily jive with existing law. The comparison serves as an example of the poor job the government has done at enforcing said law).
We’ve called out CTFK’s habit of producing misleading talking points bereft of any real facts before. I’m sure this won’t be the last time. It’s truly a shame to see them follow the same pattern of countless other left-wing organizations: to take a noble and important goal like curbing child smoking and turn it into a quest for a command-and-control nanny state. To dismiss the importance of cigarette smuggling flies directly in the face of CTFK’s stated mission of preventing underage smoking. Peddlers of illegal cigarettes don’t ask for identification any more than drug dealers do.
At their best, CTFK manipulates facts to achieve their actual goal: growing government through tobacco tax increases. At their worst, they pull “facts” out of thin air.