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“CIGARETTE SMUGGLING BETWEEN STATES SHOULD BE A FELONY, NOT A MISDEMEANOR” mentioning the U.S. Dept. of Justice was published in the House of Representatives section on pages H6085 on June 25, 2008.
The publication is reproduced in full below:
CIGARETTE SMUGGLING BETWEEN STATES SHOULD BE A FELONY, NOT A
MISDEMEANOR
The SPEAKER pro tempore. Under a previous order of the House, the gentleman from New York (Mr. Weiner) is recognized for 5 minutes.
Mr. WEINER. Mr. Speaker, I rise today to bring to the attention of the House a problem that exists, frankly, in all 50 States and is having a dramatic impact not only on individual States but having an impact tragically on our national security--the problem that tobacco excise taxes, which are levied State by State, have had the unwitting result of having a great incentive for people to smuggle tobacco over State lines. This is happening because of a weakness in the Federal law that makes it a misdemeanor to do so.
Let me explain to you exactly what happens. In a State like New York, for example, the New York State excise tax for each pack of cigarettes is $2.75. New York City adds another $1.50 to that tax. So the base tax on cigarettes in New York is the combination of $2.75 in the State,
$1.50 in the city.
If you go to, say, North Carolina or another State that has a lower tax, there's an enormous amount of incentive for someone to buy the tobacco in a State like North Carolina, sell it in New York on the black market, or sell it on the Internet and wind up saving a great deal of money on that float between the two tax rates.
Now this is illegal under the Jenkins Act. However, it's hardly ever enforced, and when you ask folks at the ATF why it's not enforced, they say quite simply, because the Jenkins Act is too weak. It only makes it a misdemeanor to do these things.
What has become clear in recent months, though, and in recent years, according to the Government Accountability Office, according to the FBI, is that not only are people trying to make a couple of bucks doing this, but terrorist organizations have been funded.
According to a GAO investigation, what has happened is that tobacco is being bought in North Carolina where the tax is only five cents a pack and being resold in Michigan where the tax is 75 cents a pack. They're taking that extra 50 cents which, when you consider cases and cases, truckloads and truckloads, and where do the profits go? $1.5 million was shipped overseas to Lebanon to fund Hezbollah. This is just one example.
FBI Director Robert Mueller, when he testified about this problem before the Senate, said the following:
``Terrorists now increasingly have to rely on criminal organizations to travel from country to country for false identifications, for smuggling, being smuggled in or out of a country. They have to rely on other criminal organizations for money laundering. We have had a number of cases where Hezbollah, for instance, has utilized cigarette smuggling to generate revenues to support Hezbollah.''
In this GAO report that revealed this information, both DOJ--
Department of Justice--and ATF suggested that if violations of the Jenkins Act were felonies instead of misdemeanors, U.S. Attorneys' Offices might be less reluctant to prosecute.
Well, I'm standing here to recommend that we do just that. We in the Crime Subcommittee of the Judiciary Committee recently had a hearing on my legislation which would do just that. It would raise the stakes on the Jenkins Act, and it would do something else. It would say that no longer can you transfer tobacco through the mail. In order for this selling to be done in a truly efficient way, you don't pack up a truck and drive it across lines; you get an Internet Web site and you offer to transport it over State lines using the mail service.
Now you can't use FedEx, you can't use UPS, and you can't use DHL. Why? Well, because they have all signed a compact, essentially a consent order saying they refuse to carry it. The only way to mail tobacco is through the United States Postal Service. So an additional thing the legislation would do would make that illegal.
This is a serious problem. As the tax goes up, as the difference between the State taxes goes up, it's no longer nickels and dimes, it's millions of dollars, millions of dollars that's going to black market tobacco that's funding nefarious activities and funding terrorism, and we should stop it.
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