The D.C. Department of Finance and Revenue, concerned by a drop off in the number of cigarettes sold in Washington, is now drafting a law that would make it illegal to transport more than two cartons of cigarettes into the city from outlying jurisdictions.
Department officials plan to enforce the proposed ceiling by posting police and tax agents outside retail outlets in Virginia and Maryland to watch for District residents violating the quota.
The proposed law, which could be in force as early as Labor Day if passed by the City Council, includes stiffer penalties and expanded enforcement powers intended primarily to prevent the District from becoming a relay point or target for cigarette bootleggers.
The department's action was prompted by a sharp decline in the number of cigatette tax stamps issued since the D.C. cigarette tax jumped last summer to 13 cents, becoming the highest in the Washington metropolitan area.
O.F. Maltagliati, chief of the Tax Audit and Liability Divisiom of the Finance Department, said he hopes to complete drafting te proposed new law by the end of this month. He said he hopes mayor and City Council will approve a 90-day emergency law while they work out a permanent statute.
Maltagliati said the bill will also include:
Penalties of up to three year's imprisonment and/or fines as high as $5,000 up from one year and $1000.
Provisions permitting D.C. tax agents to inspect without a warrant commercial establishments licensed to sell cigarettes and other places for which agents have first hand knowledge" that cigarettes are being sold illegally.
D.C. officials stepped up their enforcement efforts this spring, when they began to detect a sharp decline in the number of cigarettes sold, said Maltagliati. Using existing staff, he said, surveillance and audis of cigarette wholesalers and retailers were increased.
Maltagliati said the decline in cigarette stamps sold - about 18 per cent between Oct. 1, 1976, and last May 31, compared to the same period in 1975-76 - eased to a 2 per cent drop in recent months. He speculated that "just the word that we were out had some effect."
So far the decrease in sales has been more than offset by the higher cigarette tax and tax revenue has increased. In the same October to May period for example, the District received about $1.3 million more for stamps than it had in the previous year.
Maltagliati said he has evidence that there is major cigarette smugling targeted the District. Any operations here would be barely profitable, yielding far less than those that extend into states to the north, like New York, with far higher cigarette taxes, he said.
But Maltagliati said that at least four times in the last two months the District has been alerted by other states that bootlegeers transporting hundreds of cartons of illegal cigarettes were using Washington as a transfer point.
The new law in intended to make such transfers illegal, which they are not now unless a sale is made. In addition, Maltagliati said, the proposal is designed for the day that cigarette smugglers move south because of the "heat" of rigorous enforcement in states to the north.
Maltagliati said D.C. officilas would make a "judgement call" when deciding whether to prosecute individuals violating the two-carton limit. Consistent movement of 15 or 10 cartons into the District could start biting seriously into Washington tax revenue, he added.
Maltagliati said he expects most District residents to obey the law. "We don't expect to chase or harass every citizen that comes acros the District line," he said. In addition, he said, occasional arrests will remind citizens that authorities are enforcing the law.
Officials outside the District have already begun to notice Washington residents trying to save by buying outside the city.One official said recently that the typical D.C. smoker working in Northern Virginia might say, "Hell, I need some cigarettes, I might as well buy them here," Such behavior, the official said, "would be only natural."
Maltagliati said that D.C. officials have discovered only one real smuggling operation here since 1975, when the cigarette tax rose from 6 cents to 10 cents. The alleged culprit, who was never brought to court, had been parchasing cigarettes at an out-of-state, tax-free PX and selling them to his co-workers in a Washington office.
He might have gotten away with the scheme, but an informant blew the whistle. "Somebody didn't like him, said Maltagliati.