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Oakland Tribune
December 14, 2005
By Steve Geissinger
SACRAMENTO--Two dueling groups combined their
proposed ballot measures Tuesday into one that would slap
a $2.60 tax on a $4 pack of cigarettes to aid health care--but
officials said the 300 percent tax hike also would turn California
into a gold mine for terrorists.
The California Hospital Association and anti-smoking
groups, eyeing the November ballot, said the good far outweighs
cigarette-smuggling concerns. It would provide nearly $2.3
billion annually for emergency rooms, children's health insurance
and nursing education.
But in an acknowledgment of the cigarette-smuggling
problem, the measure would also set aside $20 million a year
for law enforcement efforts.
Federal and state officials already are waging
an uphill battle against cigarette smuggling fromlow-tax states
to high-tax states, where the cigarettes are sold at a discount.
Many of the illegal operations are now tied
to terrorism.
"Because of the immense profits
in the illicit cigarette trade, as well as the potentially
low penalties for getting caught, illicit cigarette trafficking
now rivals drug trafficking as the method of choice to fill
the bank accounts of terrorists," said William Billingslea
of the federal Bureau of Alcohol, Tobacco, Firearms and Explosives.
With existing California cigarettes taxes
pushing $1 a pack, the state adopted new laws two years ago
to fight the problem.
"Although this was an important
first start, more work remains to be done to ensure all tobacco
sales are legitimate and all appropriate taxes are paid,"
said Assemblyman Jerome Horton, D-Inglewood.
Earlier this year, California Attorney General
Bill Lockyer and nine other states' top prosecutors joined
forces with federal law enforcement agencies and major credit
card firms in the fight against illegal Internet cigarette
trafficking.
But making California's combined taxes of
$3.47 on a pack of cigarettes — the highest in the nation
— would overwhelm California with black market sales,
officials said.
"Diverse state tobacco taxes are
a key reason for cigarette smuggling, in which organized crime
and terrorist groups are increasingly involved," said
Bruce Bartlett of the National Center for Policy Analysis
in Washington, D.C.
Radley Balko of the Cato Institute in the
nation's capital said New York's black market "has aided
a bevy of international terrorist organizations and nefarious
elements, including the Russian mafia, Chinatown gangs, the
Irish Republican Army, Hezbollah and al-Qaida."
In 2002, Hezbollah ringleader Mohammad Youssef
Hammoud was arrested in Charlotte, N.C., for operating a cigarette-smuggling
ring that bought low-tax cigarettes in North Carolina and
sold them on the black market in high-tax Michigan, Balko
said.
Federal officials said a smuggler transporting
cigarettes can typically make about $2 million on a single
truckload of cigarettes.
The proposed health care initiative was unveiled
at a news conference by representatives of two competing tobacco
tax measures that had been in circulation.
One campaign was led by the California Hospital
Association and the other by the American Cancer Society.
The new campaign includes those organizations,
plus the American Lung Association of California, California
Emergency Nurses Association, American Heart Association,
Children Now, the California Association of Physician Groups
and the Campaign for Tobacco Free Kids, among others.
Because the extra per-pack tax would be expected
to curb sales, the initiative also allots $159 million a year
to offset any loss of revenue to Proposition 10 programs.
Proposition 10, approved by voters in 2004, added a tax of
50 cents per pack to fund early childhood education.
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