Be Informed.
I support harsh sin taxes in cigarettes. Smoking causes a negative externality, one that really is up-close and personal at times, and there are clear reasons why people should be paying the price for harming their own health and other’s. Problem: people turn to crime when taxes are too high. I guess that’s why addiction is scary.
Black-market cigarettes are on the rise, especially with extremely high differences in taxes among many states in United States. In some regions like New York, the tax is about $4.35 per packet while Virginia is happy with 30 cents a packet. The profit that smugglers can indulge in is better than those from cocaine, heroin, marijuana and guns. Isn’t that… almost tragic?
Cigarette resale racket is known the police as smurfing, and it is on the rise. Since 2007, at least 27 states have raised their cigarette taxes in order to cover sharp increases in health care costs or erase deficits; however, this has led to more people joining the smuggler family. About 40% of all cigarettes are smuggled to and from other states.
Some regulations have emerged in light of this and Virginia made it illegal to buy and possess more than 5000 cigarettes with the intent to sell. Unfortunately, this is not going to do much as cigarettes are extremely easy to transport: smugglers can niftily get 600 cartons into a car and 12000 into a large van.
Be Inquisitive.
- The article discusses the issue as if the problem has risen from government’s greed (to collect more sin taxes). Taking into account the price of negative externality from smokers, as well as the direct health damages done to the smokers themselves, higher sin taxes make sense (in my opinion). To say that the cause of this is greed is taking governments as a profit-oriented corporation; that, however, is unlikely to be the case.
- How serious is the problem of black-market cigarettes? Can the issue be treated analogous to the issue of legalising prostitution? Studies on the amount of money being traded in the black market for cigarettes is needed in order to measure the negative impact. One thing for sure is that illegal prostitution is correlated with human trafficking and other human rights issues; black market cigarettes – at least I predict – will not involve such social issues.
- Is this a problem only applicable for the United States? If the sin taxes were equal all across the country, will there be no black market cigarettes? Does this mean the states must set a single tax rate for cigarettes?
Based on “The Urge to Smurf”, The Economist. http://www.economist.com/news/united-states/21567111-when-government-gets-greedy-some-people-turn-crime-urge-smurf
Be Intrigued 