Smugglers use cost of S.C. smokes

Low state cigarette tax attracts bootleggers to sell in other states

The Associated Press

FLORENCE - A pack of Marlboro cigarettes cost about $3.15 in South Carolina - including the tax. That same pack of cigarettes cost about $7 in New York City, because of that state's $3 tax on cigarettes.

That profit leads some to come to South Carolina, buy the cheaper smokes and drive them back to states like New York and sell them without collecting the $3 tax.

"The financial profits are directly relative to the state tax per pack," said Earl Woodham, spokesman for the Charlotte division of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives.

Woodham, who says his agency is investigating several cigarette smuggling operations in the Carolinas, said an increase in South Carolina's cigarette tax could shift some of the smuggling activity to other states.

Carrying more than 300 cartons of cigarettes over state lines became a crime in 1979, but that limit was cut to 50 cartons by the Patriot Act passed after the 2001 terrorism attacks.

Often those limits don't even come into play, said Jessica Osborne, who works at the Carolina Discount Tobacco store in Florence. Osborne said cigarette manufacturers restrict the store from selling more than 10 cartons to a single customer.

If, however, a person were able to buy more than 50 cartons, the Federal Contraband Cigarette Trafficking law requires the store to take down the name and address of the buyer. If the buyer is from another state, the vendor is supposed to contact that state's revenue department so it can collect the difference in taxes.

Woodham said organized smugglers often get around that reporting requirement by using fake S.C. IDs. The state doesn't have to report in-state cigarette sales to any regulatory authority.

Republican S.C. Gov. Mark Sanford is calling for a 30-cent-per-pack increase in the state's cigarette tax to generate an additional $100 million in revenues to be used to cut other taxes. That revenue increase includes an anticipated 17 percent drop in cigarette sales because of the higher tax.

Osborne said she doesn't think a tax increase would hurt her business too much, but she is concerned about paying the higher price for her own cigarettes.

"People are going to smoke whether it's more expensive or not," she said. "I'd like it if they would raise minimum wage a little bit so then I wouldn't have to worry so much about purchasing cigarettes."