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Utah in Top 10 in Cigarette Smuggling

While “death and taxes” is a permanent fixture of life, in Utah the hope is by raising the taxes on cigarettes there will be a reduction in deaths from cigarette smoking. Rep. Paul Ray, R-Clearfield, who sponsored the Utah cigarette tax hike in 2010, said "We do know we have stopped people from smoking, which was my goal. And our revenues still increased. So we have less smoking and more revenue." Cigarette tax revenue more than doubled from $49.9 million to $105.3 million. The tax per pack had gone from $0.695 to $1.70. So one could technically have cigarette consumption reduced by more than half and still bring in the same tax revenue.

That was not what happened! But what did happen was that about 15 percent of smokers began going to neighboring states to buy for themselves. But others began to be involved with smuggling and bootlegging: counterfeiting state tax stamps and legitimate brands or even hijacking trucks and bribing officials to ignore illegal shipments. It is estimated that this more than doubled from 14 percent to 32 percent from 2009 to 2011. This also raised Utah’s ranking from #19 to #9 in that period.

Not all think this an accurate assessment. Frank Hales, deputy chief of auditing for the State Tax Commission, points out that “Philip Morris does its own studies constantly to identify contraband nationally and fake tobacco stamps, and finds little in Utah.” Even the Tax Commission has tried “to get Internet companies to sell them cigarettes — in violation of state law — but they never do."

There simply are not enough smokers in Utah to bring about a worthwhile return on their investment to do so. They are far more interested in huge markets like that of Southern California. Or New York state that charges a tax of $4.35 per pack and New York city that levies an additional $1.50 per pack. There the color of tobacco is GREEN!

But as with any increase in taxes on a product people just have to have, whether alcohol under Prohibition, or cigarettes under Nanny-state officiousness, there is a short-term plus: more money for pressing needs like public health, etc. But the negative is the need plus greed leads to more criminal activity and often corruption of law enforcement of these taxes and penalties for crime.

Which usually means an ever spiraling “death and taxes.”

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