“Buttlegging” Cigarettes

Once again, in the usual ironic twist, it is incontrovertibly demonstrated that cigarettes kill. As the NY post reports yesterday, a dispute between two sellers of bootlegged cigarettes ended when one of the illicit sellers stabbed and killed the other. Both men sold cigarettes at 125th Street and St. Nicholas Avenue in Harlem.

A little over a year ago, in a similar dispute, one buttlegger was shot and another was knifed to death. All of this mayhem, of course, has been aided and abetted by Mayor Bloomberg’s confiscatory cigarette tax, an 1800% increase from .08 cents a pack to $1.50. As a result, Bloomberg is responsible for the largest increase in black market smuggling in the city’s history. The income transfer, leading to the loss of 60% of the legal sales, has cost bodegas, delis, green grocers and newsstands over $250,000,000 a year. The increased tax money has been transferred to the city and state treasuries but it is the smugglers, and their Native American suppliers, who have reaped the largest financial windfall.

In spite of all the evidence Bloomberg has done nothing to stem the illegal tide and, in an Emperor’s New Clothes mindset, seems to say that the declining legal sales is evidence of a decline in tobacco consumption (to be fair, the Mayor doesn’t frequently traverse the streets most affected by bootlegging so he may just be ignorant).

The Times has the Story but Misses the Motive

In the Metro Section of yesterday’s Times, reporter Jennifer Lee reports the stabbing death of the buttlegger but fails to mention the motive for the slaying. Ironically, the times has a comprehensive Metro front page story by Michael Cooper on the State Attorney General’s frustration with the US Post Office for the Agency’s failure to crackdown on the shipping of non-taxed cigarettes. Once again, it is the Seneca Indians in Western New York who are singled out as the source. One of its websites claims that “it is not bound by federal or state laws” because it is run by Indians.

This is utter hogwash. The Supreme Court long ago decided that Native Americans were obligated to charge tax on tobacco products that are sold to non-Indian customers. The New York State Legislature has passed a law mandating that the State Department of Taxation and Finance start the collection but, in a display of pure idiocy, the pusillanimous Commissioner, Andrew Eristoff, told a legislative hearing that he was afraid of “Indian violence.”

When will the Governor Enforce the Law?

Put simply, George Pataki has refused to enforce the law. Knowledgeable observers in Albany tell us that the refusal is not really about the fear of Indian violence (and how foolish is this claim in an era of terrorism), but about the interlocking connections between these Indians, Casinos, and former officials (now lobbyists) of the Pataki Administration.

What makes this more outrageous is that while honest store owners are losing tens of millions of dollars a year, the state, according to some estimates, may be losing close to a billion dollars yearly if the sale of petroleum is factored in.

Internet and Street Sales

While Eliot Spitzer’s office has done a good job in pursuing the internet scams, the fact remains that internet sales are not the major source of non-taxed cigarettes in low-income areas of New York City. What we find in those areas are street smugglers who have likely purchased in bulk from reservations on the eastern end of Long Island. The end result is lost business and now death as illegal vendors fight for territory in Harlem.

“A Minor Economic Issue”

What makes matters worse is that when Bloomberg rammed the cigarette tax through in 2002 we predicted the black market surge and the concomitant calamity at local stores. The mayor, who clearly saw the folly of a stock transfer tax (it would hurt vital businesses, he said), called the complaints of the bodegueros “a minor economic issue.” We guess the loss of $250 million is minor for the billionaire mayor.

The mayor, and Health Commissioner Frieden, are forever talking about the (uncorroborated) deaths from secondhand smoke but when actual death occurs because of this ill-conceived tax – the largest percentage tax increase in city history – the mayor remains mute. Just like the Times missing of motive, this is an example of a class bias that simply ignores what is happening on the streets and in the stores in low income communities.