Saturday, April 26, 2008

Unintended consequences, enter the "butt-leggers"

From today's Boston Globe: "Beacon Hill's gift to the black market"

Massachusetts is awash in bootleg cigarettes.

High state cigarette taxes have turned packs of cigarettes into pots of gold for criminals, spawning a massive black market supplied by both smugglers and thieves who can quickly unload stolen cigarettes for cash.

Legislators on Beacon Hill are now planning to almost double the criminal profit margin by hiking the state cigarette tax by another buck a pack. This will only place more citizens in harm's way.
You would think Massachusetts would learn from her mistakes:

The Bay State is no stranger to cigarette tax-induced crime. Soon after the state tax was enacted in 1939, legal, tax-paid sales fell, as cigarettes were smuggled in or diverted from tax-free stocks and sold in the ordinary market. Merchants in neighboring states also began advertising the tax-free prices available in their stores.

Massachusetts tax authorities responded by stationing agents in neighboring states to photograph border shoppers lured by bargain smokes. That failed, and so did more frequent audits of wholesalers and retailers.
But, much like Barack Obama's wisdom that higher taxes on capital gains are meant to be punative rather than revenue-generating, the high cigarette taxes serve some government sense of "fairness" even if tax revenues drop and organized crime flourishes.

Hey, they tried to do the right thing.

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