COLUMBIA - South Carolina offers the
cheapest smokes in the nation - a fact federal officials say will
make it a magnet for black market cigarette runners.
New York officials say the Palmetto State already is the source
of cigarettes smuggled illegally into that state.
But S.C. officials say they see no evidence that cigarette
smuggling is a problem in the Palmetto State.
In any event, they add, it's not South Carolina's problem, and
they don't intend to make it tougher for the illicit trade.
Cigarette trafficking is a multimillion-dollar business that
shows little sign of slowing down.
It also is attracting some of the nastiest elements of the
criminal world, federal authorities say.
Lower taxes on cigarettes in Southeastern states mean bootleggers
can buy them cheaper here, sell them at discounted prices in
high-tax Northern states and still profit handsomely.
New York, Michigan, Pennsylvania, New Jersey and Maryland are
just a few of the states trying to stop truckloads of cheap
cigarettes entering their borders.
However, officials of S.C. law enforcement agencies say they see
no evidence the Palmetto State is the source of cigarettes smuggled
elsewhere.
The bottom line:
No one inside South Carolina or elsewhere can say just how big a
problem cigarette smuggling is here, but that doesn't mean federal
and state officials elsewhere have no cause for escalating
concern.
New York authorities say the Palmetto State is part of the
pipeline of cheap smokes running up the Eastern Seaboard.
"Sure it is," said Michael Bucci, spokesman for the New York
State Department of Taxation and Finance. "But it's not just South
Carolina. It's also Virginia and other states in that region that
have low taxes."
At 7 cents a pack, cigarette taxes in South Carolina are the
lowest in the nation.
That's because North Carolina lawmakers recently raised that
state's cigarette tax to 30 cents per pack - up from the previous
national low of 5 cents. That state's tax will go up another 5 cents
next year.
Taxes in other states and cities are far higher, making smuggling
a profitable business.
For example, the sales tax alone on a pack of cigarettes in New
York City is $3, compared with 7 cents in South Carolina.
Smugglers make money by buying cigarettes in South Carolina or
another low-tax state and reselling them in a high-tax state for a
price lower than that state's prevailing price, including its
taxes.
So, the difference in cost from South Carolina to New York City -
almost $30,000 for, say, 1,000 cartons - would leave plenty of room
for a hefty profit, even with the cost of transporting the
cigarettes.
"The lower the tax, the bigger the profit," said Earl Woodham, a
spokesman for the Charlotte office of the Bureau of Alcohol,
Tobacco, Firearms and Explosives. "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."
Officials in other states also complain that South Carolina makes
it easy for smugglers. Like many other states, South Carolina
stopped putting state tax stamps on cartons of cigarettes years
ago.
S.C. Department of Revenue director Burnie Maybank says the tax
stamps were expensive and did not benefit the state.
But the absence of an S.C. tax stamp makes it easier to resell
cigarettes smuggled out of the Palmetto State in higher-tax
states.
"If there's no tax stamp, its a lot easier to just affix a
counterfeit," New York's Bucci said.
Maybank is unfazed.
"The purpose [of the stamps] was to make sure taxes are paid in
South Carolina, not to protect higher taxes in New York state,"
Maybank said.
He added that evasion of S.C. taxes on cigarettes is rare.
Smuggling more than 300 cartons of cigarettes is a federal crime
punishable by up to five years in prison and a $250,000 fine.
