Some of those trucks rumbling up I95 every day carry bootleg cigarettes that are bought legally in North Carolina or Virginia and then smuggled up the East Coast to evade the higher taxes (as much as 21 cents a pack higher) imposed in the Northeast. Each cargo is worth $20,000 to $30,000 in illegal profit to the bootlegger. Nationally, the net loss in tax revenue is estimated at $300 million to $400 million, and the net take for those bootlegging operations run by organized crime at $200 million.
That's why one bill approved by Congress in its last weekend makes it a federal crime to possess or transport at one time 300 or more cartons of cigarettes that do not bear a tax stamp of the state in which they are found. The penalty is up to five years in prison and a fine of up to $100,000. If the federal government takes its new responsibility seriously, the big-time operators can be driven out of business rather quickly.
The legislation is long overdue and would have been passed much sooner but for the opposition of some tobacco-producing states. North Carolina might lose $10 million and Virginia $2 million in tax revenue each year if all bootlegging were snuffed out. New York might gain $70 million.
The law should also clear the way for states like Virginia to raise their cigarette taxes. Virginians don't like to talk about that aspect of the legislature's consistent refusal to consider a higher tax. But there has always been a fear that if it did, sales of cigarettes would drop as some big-time operators shifted their business to North Carolina. If the federal government does its job well, that fear will disappear, and Virginia will have to squarely confront the fact that it remains one of the few states and refuse to use their taxing powers either to raise much revenue or to discourage smoking.