COLUMBIA, S.C. - South Carolina's
lowest-in-the-nation tax on cigarettes is making the state even more
popular for people trying to dodge taxes in other states, but law
enforcement officials here aren't ready to do much about that.
A couple of cartons isn't the issue that some states fret. It's
seeing whole truckloads of leaving South Carolina taxed at 7 cents a
pack that are resold in their states and avoiding far higher
taxes.
Bootleggers buy cigarettes cheaper in Southeastern states, where
the costs and taxes tend to be lower and sell them in Northern
states, where taxes are much higher. New York, Michigan,
Pennsylvania, New Jersey and Maryland are a few of the states trying
to stop truckloads of cheap cigarettes entering their borders.
New York authorities say the Palmetto State is part of the
pipeline of cheap smokes running up the Eastern Seaboard. "But it's
not just South Carolina," said Michael Bucci, spokesman for the New
York State Department of Taxation and Finance. "It's also Virginia
and other states in that region that have low taxes."
It's a profitable crime with low risk of getting caught. And
those that do face mild punishments.
For the tax dodgers, it's a fairly safe and profitable
business.
"It's a safer way to make illegal money than typical drug
trafficking," said Earl Woodham, a spokesman for the Charlotte
office of the federal Bureau of Alcohol, Tobacco and Firearms. "And
the profits can be just as good, if not better, than drugs."
Since that crime happens in another state, State Law Enforcement
Division Chief Robert Stewart says his agency wouldn't normally be
involved in investigating cigarette trafficking.
"We investigate crimes against the state," Stewart said. "It
sounds like they'd be violating another state's law or federal
law."
South Carolina's 7 cent tax on a pack of cigarettes is minuscule
compared to New York City's $3 cigarette sales tax. That means a
thousand cartons bought in South Carolina could bring profits of
nearly $30,000 if those cigarettes are sold in New York City.
"The lower the tax, the bigger the profit," said ATF's Woodham.
"If you have organized criminals that would benefit financially from
moving their operations to another state, it's only common sense
that they would do that."
States dealing with the bootleggers want South Carolina and other
states to do more to make it difficult to break their laws.
For instance, the lack of a tax stamp on the bottom of each pack
of cigarettes sold here makes it easier for smugglers.
"If there's no tax stamp, it's a lot easier to just affix a
counterfeit," said New York's Bucci.
But state Revenue Department Director Burnie Maybank says the tax
stamps were expensive and didn't benefit the state. And their
purpose "was to make sure taxes are paid in South Carolina, not to
protect higher taxes in New York state," Maybank said. "Why should
we spend money ... for the benefit of a high-tax state?"
Maryland has gone after cigarette runners, arresting 476 people
during the past four years as they tried to smuggle nearly $7
million worth of cigarettes through the state. They face up to two
years in prison and can be fined $50 a carton.
"Clearly these guys weren't buying these for their own personal
use," said Michael Golden, a spokesman for the Maryland comptroller
general's office.
