Tax ’em if you got ’em

Tax ’em if you got ’em

Bogie and bacallCalifornia is inhaling another pack of attempts to increase cigarette taxes. Joe Mathews enthuses about it on Fox and Hounds:

This state needs to raise tobacco taxes. For a state as properly focused on health as California, the fact that we have unusually low such taxes is downright weird. We should be well above the national average in our level of taxation.

According to the Tax Foundation, our state cig tax of 87 cents is 32nd highest among the states. The highest is New York State at $4.35. As you might expect, cig taxes generally are lower in the Southeast tobacco states, highest in the Puritanical states in the Northeast, such as New York, and their offshoots in in the West, such as Washington at $3.05.

Strangely, Washington just legalized marijuana. It reminds me of the hippies who used to introduce the movies shown evenings in the auditoriums at the University of Michigan when I matriculated there 40 years ago. They would smirk, “During the movie, no smoking” — pause — “cigarettes.” Then when the lights went down half the audience (although not yours truly) would light up joints.

No wonder America didn’t survive us Baby Boomers.

Tobacco vs. wacky tobacky

And here’s something interesting. In 1996 Proposition 215, which legalized medical marijuana, passed in hippy San Francisco with 78 percent of the vote, but lost in reactionary Sutter County, getting just 39 percent. Sutter is so uptight it even banned alcohol in the 1890s, way before national Prohibition in the 1920s.

Now look at Proposition 29, the cigarette tax increase on the June 2012 ballot that barely lost. SF: 74 percent yes; Sutter County: 35 percent yes. That’s just about the opposite of Prop. 215. So in Frisco, when you give up the coffin nails and get withdrawal shakes, you just start toking. Whereas in Sutter, you’re an Okie from Muskogee and “don’t smoke marijuana” but inhale tobacco like the Marlboro Man.

And here’s something interesting. Orange County generally is considered to be a reactionary place. Not surprisingly, just 42 percent favored the Prop. 29 cig tax increase, especially with the Orange County Register editorial page (on which I still freelance) coming out strong against it.

But you might not expect that O.C. also backed Prop. 215, with 52 percent voting yea. Some of that also must have come from the Register, where longtime senior editorial writer Alan Bock wrote many editorials backing 215, and wrote a book on the medical marijuana movement, “Waiting to Inhale” (a play on the 1995 movie, “Waiting to Exhale“; alas, Alan died in 2011; great guy).

So at least in this comparison, Orange County really does live up to its libertarian reputation, preferring to let people choose what poison they light up with, while SF comes off as a place of hippy hypocrites.

Black markets

Back to the tobacco tax…

What Mathews didn’t even hint at is that bans and high taxes ignite black markets. That obviously is the case with marijuana, where it remains illegal. But it’s also true with cigarettes. I did a lot of research on this in the mid-1990s when Canada boosted cigarette taxes. The evidence showed that a vast black market caught fire once a pack cost $7 Canadian.

Adjusting for inflation and currency exchanges, that would be about $9 in U.S. dollars today. Currently, a pack of cigs in California costs about $7 in grocery stores, including all taxes; a couple bucks less in tobacco stores. So if the current initiative proposal of boosting taxes $2 a pack is passed, a pack would cost $9 at grocery stores, right on the edge of what caused widespread bootlegging in the Great White North.

The Chronicle reported on Nov. 9:

According to a study released last month by an affiliate group of the California Chamber of Commerce, a $2 increase would double smuggling rates in the state to almost 40 percent of cigarettes consumed.

The group, California Foundation for Commerce and Education, estimated that the Bay Area alone would lose $4.7 million in local sales tax revenue and 2,900 retail jobs if cigarette smuggling increased.

Proponents of the tax dismiss the warnings as propaganda.

“These are the same lies as before that never came true,” said Mike Roth, a spokesman for the cigarette tax ballot proposal, which was submitted last month and is pending in the attorney general’s office. If approved, the measure would need 504,000 signatures to qualify for the 2014 ballot. Roth said the proposal would fund new cancer research and discourage current and future smokers from the habit.

Smuggling

Lies? I remember when the cig tax was increased a mere 25 cents back in 1988 with Proposition 99. A local liquor store here in Huntington Beach was knocked off the next day. The owner hired a firm to put iron bars on his front door, over the mere glass door that had been there before. I asked what happened. “They broke in through the door and stole all the cigarettes,” he said. I asked about the expensive liquor. “No, they left that. It’s too heavy. They just grabbed armfuls of cartons and took them.”

And here’s what’s going on in the New York anti-cigarette utopia. The New York Post reported:

The jailed head of a multi-million dollar cigarette smuggling ring and one of his top lieutenants plotted from behind bars at Rikers Island to kill witnesses they believed were cooperating with law enforcement officials, authorities said.

But when ringleader Basel Ramadan placed a phone call to hire a contract killer he was really talking to an undercover NYPD detective.

Attorney General Eric Schneiderman and Police Commissioner Ray Kelly announced the new indictment of Ramadan and Yousseff Odeh on Thursday.

They were among 16 Palestinian men charged in May with running a massive smuggling ring that flooded New York City and the Albany regions with millions of cartons of unstamped cigarettes. Officials said the ring had direct ties to Mideast terrorists and some of their profits may have been funneled to Hamas and Hezbollah.

According to state Sen. Tony Avella, D-Queens, “The fact that 60 percent of all cigarettes sold in New York were smuggled in from other states, that’s unbelievable. It’s incredible.”

If California’s smoke taxes go up $2 a pack, to $3.87, it’ll be happening here too. An whereas Big Apple contraband cigs come from Indian reservations and Virginia, California’s will come from Mexico. If the government can’t stop cocaine and people from slipping into California illegally, how will it stop packs of smokes?

4 comments

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  1. LetitCollapse
    LetitCollapse 3 December, 2013, 20:06

    To me it’s obvious what they’re doing. The plan is to price as many people out of the cig market as possible. And when they’ve hit their target to minimize pushback from the masses – drop the hammer and make tobacco an illegal controlled substance. Then the mexicans mules will fill the side panels of their cars with tobacco and bring it across the border. Dope dogs will be trained on tobacco. And the police state will have a new revenue source. Watch. That’s exactly where they’re moving with this. They just can’t do it today because too many people still smoke.

    I don’t smoke. But I champion the the right to smoke for those who choose to do so. But I think they should pay a premium price for healthcare insurance too. I support their habit in spirit, but I don’t want to help them pay for the consequences. They should independently own that and not push their related costs off on me. What’s fair is fair.

    I did a little research. A survey showed that a 20 pack of cigs in CA costs about $6.77 a pack. Ranked #20 in the nation. You know how much a pack costs in NY? You sittin’ down? $14.50. lol. No wonder smuggling has become a business there. NYC took away their big gulps too. No idea why people consent to this fascism. But it just goes to show the level of what people will tolerate and what the gov can get away with. No wonder they can listen to our phone calls and read our emails without our consent then lie about it under sworn oath to congress with immunity with relatively little adverse reaction from the peasants. They know that they can do it and get away with it. You let them. lol. If some guy walked into your house and stole your big screen right in front of your eyes – and you did nothing about it, he’d be back next week for your living room furniture and jewelry. lol. What do you expect? lol.

    But eventually they will criminalize tobacco and they will do it “for the children” and for your “safety”. Just like they forbid residents in the State of Maine by law to buy American-manufactured pharmaceuticals from Canada at a 40%-80% discount. For their “safety”. lol.

    Are you waking up yet??? lol.

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  2. Bobnormal
    Bobnormal 4 December, 2013, 06:53

    John your credibility is shot when the first thing you say is”wacky tabacky”, you sound like an ignorant Pol, and I don’t think you are, from all of your writing.
    So, you realize that all us Baby Boomers buy our Marijuana at dispensaries, right? no black market, I smoke little cigars at 1.40$ per pack, many people are using ecigs.
    They can try to tax us, but the market, black or White, will prevail, as California slips beneath the waves, R.I.P. Cali,
    Bob

    Reply this comment
  3. Queeg
    Queeg 4 December, 2013, 10:50

    Had a distant cousin doomer, proud, 60 year professional, “local” peach, strawberry, mash fermenter in Appalachia with two daughters with Masters degrees and the family never took a buck from the government.

    He staunchly believed in “trickle down economics” . He was a jolly bib overall wearin patriot….always had the biggest, heavily chromed, white side walled, shiniest Buick in the county!

    Reply this comment
  4. Uma
    Uma 8 December, 2013, 22:31

    Raising taxes will hurt families as well. Aren’t the children who are caught up in the financial political nonsense hurt enough already? A smoker quits when the timing, gumption, help and stress are right. Forcing them to quit is counterintuitive to this. Force breeds rebellion & stress. Smokers stay home, don’t patronize their local towns.
    Even the Vapers have been fighting hard. The Groups who earn a yearly salary from the court ordered TSET are spending money left and right to ban the safer alternatives to smoking. Even the 99% safer alternatives! such as Swedish Snus and eCigs. They should be spending this on education, not bribes and propaganda. Who profits from TSET? ACA, ALA, CDC, you name it, they’re all in there. Big Pharma has their greedy hands in the pie too, ie.. Smoking cessation products, diet pills, etc… To learn more, just go to changelabsolutions, who advises towns how to ban eCigs, sugar, etc.. See who funds CLS! That’s right, many of the big Pharma fronts. Robert wood Foundation aka Johnson & Johnson aka Pfizer aka Chantix, gum, patch whatever… A BILLION dollar industry just in smoking cessation products alone. Products with only about 10% success rate vs the eCigs & Snus with 75-90% success rate. (Beware of propaganda data twisters. The CDC has been called out by scientists & doctors alike for the way they (CDC) are deceiving the public).
    TSET and all who benefit from TSET are bribing towns to ban cigs and now eCigs. Big Pharma is lobbying to ban due to lost revenue. States lobby to ban safer alternatives due to lost smoke tax, plus to justify smoke tax on eCigs after they demonize them enough. Cities lobby to ban, for Grant money from TSET & RWF. It’s a vicious, filthy circle of corruption. It sounds made up, crazy, lunacy, but it’s all true.
    Raising the taxes on smokes, when smokers are switching to eCigs by the thousands, is setting it up for taxing the eCigs, a non smoke, non CARCENOGENS, non toxic, far less dangerous safer alternative, just like they tax cigarettes.

    July 2013 states refused to set age restrictions on eCigs, for fear of loosing the “for the kids” excessive taxing of. They called the age restriction bill a Trojan Horse. http://www.dispatch.com/content/stories/local/2013/07/22/e-cigarette-bill-called-trojan-horse.html
    September 2013. AG’s write letter to FDA urging prompt regulating, “for the kids”.
    http://www.naag.org/assets/files/pdf/E%20Cigarette%20Final%20Letter%20(5)(1).pdf

    Drexel study proved they are safe for user and bystander http://publichealth.drexel.edu/~/media/Files/publichealth/ms08.pdf
    IVAQS proved they are safe indoors http://www.ivaqs.com
    UTAH CLEARSTREAM AIR proved they are safe for environment http://www.utahvapers.com/clearstream.html
    The FULL Lancet study proves the CDC lied, proves eCigs are an EXIT from smokes. Yet the CDC continues to laugh & lie. The Lancet team has since posted this essay http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3850892/#!po=12.0690
    And there’s more. Tons more!

    This, my friend, is why they want to raise the cig taxes so high. Those who can’t quit, switch. This drives them into a crazy panic for their yearly salaries.

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