Tuesday, September 06, 2005

Tobacco Smuggling Ring Busted

Newsday reported last week that a cigarette smuggling ring was broken up through the combined efforts of the ATF and the NYPD, among others. The ring is estimated to have deprived city and state coffers of as much as $24 million in tax revenue. As Newsday pointed out, the cigarettes were purchase from the Shinnecock Reservation in Southhampton and the Poospatuck Reservation in Mastic.

Most ominously it is believed that the ring, made up of Middle Easterners, was using its profits to promote terrorism. The smuggled cigarettes were re-sold in mostly Bronx bodegas. What it points out, however, is that the failure of New York state government to enforce the tax laws against Indians not only threatens legitimate store owners struggling to compete in an environment of confiscatory taxation, but is also a threat to everyone's public safety.

We need to remind folks that the creation of this lucrative black market is the doing of Mike Bloomberg. When you raise taxes on a product by 1800% (From.08 cents a pack to $1.50), and the product is readily available in no-tax or lower tax venues, you are simply inviting the creation of a lucrative black market. In addition, you are also threatening the livelihoods of legitimate shopkeepers who are forced to compete with black marketeers (Who often sell their smuggled goods right in front of the neighborhood stores).

When we pointed this out to the mayor three years ago, and demonstrated that the tax had taken $250 million a year from local bodegas, green grocers and newsstands, Bloomberg's remark remains a classic: "It is a minor economic issue." This from the great champion of neighborhood business.

One last observation. The good work of the task force in this matter obscures the fact that it is without a doubt only the tip of the ice berg. Selling of black market smokes is rampant in this city and the concomitant evaporation of the legitimate sales remains for the mayor a "minor economic issue".