In New York City, police have taken down an illegal cigarette ring that was operated in a Queens warehouse and sold cartons from the trunks of cars. Normally a carton of cigarettes cost $75, but since this ring was selling tax-free the cartons only cost around $25. I’m not sure what percentage, but it seem a significant number were counterfeit. The district-attorney says they are unsafe:
The counterfeit cigarettes were exceptionally more harmful than U.S.-made ones, because the fakes don’t adhere to New York state law requiring “firesafe” cigarettes that automatically burn out if not puffed after a brief period of time, Rice said.
I was under the impression that the biggest harm from cigarette use is lung cancer and emphysema, not whether they are firesafe (but I understand the rationale for this protection). Still, if they really care about not having fake cigarettes on the market (and thus the safety of the citizens), I’ve got an easy solution – lower the taxes on the damn things! This is a perfect example of an extremely heavy tax leading to black market goods. When given the choice between legal and illegal, most people choose legal. But a heavy tax puts legal cigarettes out of the reach of many smokers…smokers who will find a way to get their nicotine fix, and in this case obviously have.
Interestingly, I found an article from way back (ok…not really way back, but 1996) in Reason magazine discussing a similar issue (only it was on the implications of smoking prohibition, though a huge tax can essentially be a form of prohibition):
The high price of cigarettes will force smokers to reduce other expenditures or seek extra income. Some will resort to begging, theft, or prostitution. In addition to shelling out a lot more for cigarettes, smokers will face the familiar hazards of a black market. They will not know if the product is adulterated or contaminated, and they will have no recourse if they are cheated.
Smoking should be discouraged, and taxes are one way of achieving this…but taxes that are too large create this underground situation which has the potential to be very dangerous and hazardous to our safety (and the safety of smokers). Perhaps we should start looking at other alternatives to discouraging unhealthy behavior beyond taxing the hell out of it…but what do I know.