Mich. Legislators Look to Tighten Contraband Cigarette Laws

Mich. Legislators Look to Tighten Contraband Cigarette Laws
December 8, 2008

News Summary

Michigan residents who buy or sell even small quantities of contraband cigarettes would face penalties under a proposal now being considered by state legislators, the Associated Press reported Nov. 30.

Michigan's cigarette tax stands at $2 a pack -- sixth highest in the country -- making the state a prime destination for cigarette smugglers. Current regulations call for fines or jail time for an individual or store owner having six or more cartons of contraband cigarettes, but legislators are looking to make it a civil infraction to have as few as 180 cigarettes -- less than the number contained in a single carton.

A store's license could also be suspended if cigarettes are sold illegally. "If you take away their right to be involved in the sale of tobacco, that would be a significant deterrent not to violate the act," said Judy Anderson, head of the Michigan State Police's Tobacco Tax Enforcement Team.

It is illegal in Michigan to own a package of cigarettes that is not stamped with a state tax sticker, making even the purchase of cigarettes in neighboring Indiana or Ohio -- where they are up to $1 cheaper -- a violation of state law.

In November, 18 men were arrested by federal and state authorities on trafficking charges involving 104,000 cartons of contraband cigarettes, which amounted to $2 million in lost state revenue. The state treasury department reported more than 23,000 residents owe taxes on tobacco bought from Web sites or through mail-order companies, amounting to $36 million in taxes and penalties over a three-and-one-half-year period.

Wholesalers, who collect more than $1 billion in taxes yearly, are in favor of the new legislation. "We would argue we need to do much more in cigarette tax enforcement," said Polly Reber, president of the Michigan Distributors and Vendors Association.

The legislation also received support from the tobacco industry, which opposed the high tax rates but endorsed strengthening the system for legal distribution of tobacco products. "With contraband trade, you don't know how old it is, how it's stored, how's it's been shipped," said David Sutton, spokesman for Philip Morris USA.

The legislation was passed by the state Senate and is pending in the House of Representatives.

COMMENTS ON THIS ARTICLE:

Posted by AndrewK@Stonehill College on 09 Dec 08 05:37 PM EST

Although I like the idea that states can benefit from the tax on sales of cigarettes, I do not think that people should be punished for buying a product in another state. If I were to go to another state and buy clothes, food, or any other product I wouldn't be penalized, so why would cigarettes be any different? It is true that such laws would help with quality control of cigarettes, but if someone is willing to smoke cigarettes in the first place, it doesn't seem to me that health is a big concern. It makes me sad to see that there is more concern over who gets more money for the cigarettes than the detrimental effects the cigarettes have on a person's health. Hopefully the cigarettes companies will be punished rather than the victims.

Posted by Loyal G on 10 Dec 08 02:20 PM EST

Looking at it from the states view, I understand why they would want to protect their tax income at all cost. When the personal taxes are done at the first of the year, citizens are to report all out of state purchases that their state taxes were not collected for. Then you were to add that amount to your tax bill. From a personal/citizen point of view. We cannot tax someone else to support our habit, we have to work for our living so if the consumer needs to cut cost in order to survive, we shop stores where we get the best deals. It is the states responsibility to make the state taxing enviroment for business, friendly so they will locate here. Else, the state needs to work out the details on sharing taxes paid for products purchased in other states. It is unfair for the states to require the citizens to only purchase in-state products or to pay taxes for anything purchased out-of-state if that state does not collect the tax and return it to your home state. The difference between a citizen consumer and the government consumer is the citizen has to actually go out and earn a living by producting a product that others purchase.

Posted by Lynn Miller on 11 Feb 09 02:54 AM EST

With the way this country is becoming I am no longer afraid of the end of the world. The government is greedy and doesn't care about the people. What happened to love thy neighbor?

Miss. Governor Agrees to Tobacco Tax

Federal Cigarette Tax Hike Could Affect State Plans

Marijuana Legalization Drive Fueled by Current Events

States, Losing $5 Billion Annually to Cigarette Smuggling, Fight Back

Why Raise Alcohol Taxes?

Targeting Blacks: Drug Law Enforcement and Race in the United States