In the Alliance's campaign to close the loophole that allows Indian retailers to sell cigarettes tax-free, we have argued that the existence of this tax avoidance venue renders any new tax increase ineffective in accomplishing the stated health goals of the policy measure. Simply put, with so many tax-free avenues open the only thing that an increase does is to increase the attractiveness of the illegitimate outlets.
Which brings us to the arguments of some of the anti-tobacco advocates. One of the things that has always fascinated us, and not only when it comes to the issue of tobacco control, is the assumption that the "industry" study or report is-ipso fact-unreliable. Now we'd be deaf and dumb if we didn't acknowledge that in terms of the tobacco industry there is no credibility whatsoever.
This doesn't mean, however, that the anti-tobacco folks (or any other good government pretender for that matter) are unquestionably reliable. These people have biases as well.
Every interest is a special interest and reports and studies must be independently evaluated for their merit.
This can be seen particularly in the arguments pro and con on the issue of second hand smoke where the reports issued by anti-tobacco advocates were reprinted as gospel by a media that refused to suspend its disbelief because it by and large shared the advocates' views. Lost in all of this was the fact that the World Health Organization had done a ten year longitudinal study that failed to show correlations between second hand smoke and cancer and heart disease.
Of course none of this was reported when Mayor Bloomberg introduced his ban on indoor smoking in his first term. All we heard was the Health Commissioner's outrageous claims that 1,000 New Yorkers were dying every year from the effects of secondary smoke. Any contrary point-of-view was attributed to the evil empire-the "tobacco lobby."
Now we come to the tax question and once again we confront activists arguing public policy and making little or no sense at all. Case in point: Campaign for Tobacco Free Kids. First, they begin their arguments for higher tax increase by labeling every argument a "cigarette company myth." When you see this you know that you are in the realm of propaganda, or better yet theology.
One of the "myths" they tackle deals with the impact of smuggling. It is a classic strawman argument because it focuses, not on the impact that smuggling has on legitimate small retailers (folks they could care less about), but on state revenues. They argue in their "fact sheet" the following: That every state that increases the cigarette tax experiences a revenue boost "despite the lost sales from related smoking declines and despite any increase in cigarette smuggling or other tax-avoidance."
Of course, when you increase the cigarette tax, as the City of New York did by 1800%, revenues will inevitable increase even though sales may plummet by over half. These half wits then go on to proclaim that smuggling is a "relatively minor problem." The Campaign goes on to argue that the NYC increase "supposedly" led to the highest degree of smuggling but (strawman again) city revenues increased. This only is a minor problem if you don't own a bodega or green grocer since those outlets lost millions of dollars of sales and ancillary revenues from sales of other items that would have been accompanied when the cigarettes were purchased.
So, according to the Campaign for Tobacco-Free Kids, smuggling is still a minor problem when over half of all smokers aren't paying the tax. This is exactly the mayor's point-of-view since anything that impacts a small store's bottom line is a minor issue for him.
All of which begs the question of Indian sales. It is indisputable that this is the loophole that is flooding the streets of the city with illegal smokes. If you care about kids smoking than you should be getting on your soap box and railing against the governor. It is clear that if this loophole is closed city and state revenues will increase since the nearest available non-taxed outlets will be closed. Those are the facts that even the ideologically blinded folks of the Campaign should be able to see clearly.