Last July Tennessee raised the state tax on cigarettes to 62 cents per pack - a 42-cent per pack raise. That made Tennessee’s cigarette tax higher than any of the eight states it borders, in some cases, much higher.
And Tennessee’s ruling class seems surprised - but shouldn’t be - that smokers living within an hour’s drive of the border, which is almost all Tennesseans, are cruising to another state the buy their smokes. Maybe smokers (I am not one) drive more than an hour, I dunno. But drive they do, even though their purchase savings are greatly offset, if not eliminated, by the cost of the fuel they use and the wear and tear on their autos.
Unless, of course, they buy a lot of cigarettes. And therein lies the problem. It is also against the law in Tennessee to bring more than two cartons per person (I think, but it could be per vehicle) of cigarettes into Tennessee.
Under state law, bringing more than two cartons of cigarettes into the state without paying Tennessee taxes is a “Class B” misdemeanor, carrying punishment of up to six months in jail and/or a $500 fine. Bringing 25 or more cartons is a “Class E” felony, with minimum penalty of one year in prison and a maximum of six years plus a fine of up to $3,000. In addition, the specific state statute dealing with untaxed cigarettes provides that vehicles used to transport more than two cartons “are considered contraband and are subject to seizure,” says a Department of Revenue statement.
Farr said that agents have been instructed to seize any vehicle carrying more than 25 cartons of cigarettes without Tennessee tax stamps. In cases where three to 24 cartons are involved, he said vehicle seizure is “at the officer’s discretion.”
As one wag remarked somewhere on the Internet, Tennessee’s increased revenue from the rise in taxes will be used to pay for stopping freelance bootleggers.
James Joyner (whence the cite) asks, reasonably enough,
How this can possibly be constitutional is beyond me. First, what gives Tennessee police officers the authority to operate across state lines? Second, surely seizing a vehicle potentially worth upwards of $40,000 for the “crime” of possessing more than two cartons of cigarettes amounts to excessive punishment under the 8th and 14th Amendments?
First, Tennessee revenooers can’t make arrests outside their legal jurisdiction, but they may cross state lines in the otherwise performance of their duties. But the Constitutional questions are compelling, I think. I’d argue against what Tennessee is doing because of the
Commerce Clause of the main body of the Contitution:
Article I, Section 8, Clause 3 of the United States Constitution, known as the Commerce Clause, reads as follows:”The Congress shall have Power …To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.”
I think it’s simply beyond arguing that Tennessee is attempting to regulate commerce across state borders, authority for which is reserved by the Constitution to the US Congress, and is thereby usurping a federal power.
Where does personal use end and bootlegging begin? Bootlegging meaning reselling the smokes in Tennessee for profit, not buying a dozen cartons for Aunt Esmerelda, who is too weak to drive because of her emphysema, and who pays back the exact amount of the purchase.
Tennessee does have a legitimate interest in prohibiting bootlegging of cigarettes, and for that the 25-carton limit seems reasonable to me. But conviction for actual bootlegging would require more than possession of some arbitrary number of cartons, would it not? If a legger bought other-state cigs, saving $4.50 per carton (45 cents per pack), then he’d have to charge his illicit customers at least half that to recoup costs and make a profit. So, 25 cartons bought at $4.50 discount = $112.50, call half of it profit at resale, or $66. Do that six days per week and the legger nets almost $400 per week.
But the state has brought all this on itself because it raised the tax and thereby generated the incentive for the majority of Tennessee smokers to buy across state lines. That’s the trouble with vice taxes, they require inordinate resources to enforce and often criminalize what would otherwise be seen as quite reasonable behavior. Tennessee’s standard sales tax is already one of the highest in the nation, why not just tax cigarettes at that rate (9.25 percent where I live) and be done with it?
Oh, I know, I know, don’t bother to try to enlighten me.