Correction, please!

ITEM: "Massive increases in cigarette taxes that 20 U.S. states are enacting to help plug budget holes are so far swelling coffers as expected despite also raising sales of 'contraband' smokes, states say," said a Reuters dispatch in the San Diego Union-Tribune for October 31st.

Tobacco Tax Crime Cancer

CORRECTION: That the "coffers" are swelling is greatly overstated. "Between 1992 and 2000, the average state cigarette tax rate increased 64 percent while gross state tax revenues rose only 35 percent," observes Bruce Bartlett of the National Center for Policy Analysis. "The apparent fall in smoking rates over this period was not nearly enough to account for the revenue shortfall. This suggests that states expecting higher revenues from recent cigarette tax increases may never see them."

In fact, what should have been anticipated is occurring: The huge tax increases have led to much more smuggling, benefiting organized crime and even terrorists. As the Washington Post reports, there is now a "vast and burgeoning underworld of criminals" involved in smuggling. "Criminals who once dealt exclusively in illegal drugs are now smuggling cigarettes because it is so lucrative and punishments generally are much less severe." Jerry Bowerman, a top official of the Bureau of Alcohol, Tobacco and Firearms, says: "Cigarettes are becoming a smuggler's paradise." One interstate run can bring in $600,000 for a truckload, says an analyst.

Hezbollah terrorists have benefited from an operation between North Carolina and Michigan, reports U.S. News & World Report -- which also describes how cigarette smuggling has helped al-Qaeda and Saddam Hussein's Iraqi regime.

Meanwhile, New York Mayor Michael Bloomberg, a reformed smoker, is moving to ban smoking in bars and restaurants, pool halls and bowling alleys -- even private clubs. Tax hikes pushed "the cost of a pack to around $7.50, the highest in the country," reports USA Today. "Retail sales have dropped almost 50% since the price increase July 2, and smuggling and Internet sales are thought to have increased substantially."

Progressive Tax Fallacies