BLOOMBERG BEGS FOR MORE CRIME Mayor Bloomberg's recently announced budget includes jacking up the city's tax on cigarettes another 50 cents. Says Mike: "There's a clear correlation . . . You raise your cigarette taxes, fewer children go and smoke." Actually, according to the Centers for Disease Control, New Yorkers' smoking habits mirror national trends; tax hikes have no evident effect. But that's beside the point. The mayor really should deal with certainties — one of them being that organized crime would make a killing. New York's history with cigarette taxes is a long, sordid and embarrassing tale, as documented in an insightful study by Patrick Fleenor. The city's first tax on smokes came in 1938 and was, like all new taxes, "temporary." Politicians assumed the penny-per-pack levy would be innocuous. The reverse was true: Cigarette bootlegging, crime associated with bootlegging and "border-shopping" (buying smokes from outside New York) immediately became problems. When the state levied a tax in 1939, the problems grew. In 1964, after the U.S. Surgeon General issued the famously damning report on the health effects of smoking, New York lawmakers jumped at the opportunity, doubling the tax from 5 cents to 10. "From that very moment, bootlegging became a major problem," says Roy Goodman, the city's finance administrator at the time. When mobsters forced amateurs out of the burgeoning buttlegging trade, Goodman called cigarette smuggling the "principal stoking facility of the engine of organized crime." Eventually, the threat of hijacked trucks made shipping cigarettes so dangerous that trucking companies had to form convoys, and the costly security measures put some firms out of business. In response, the city and state devoted more resources to combat bootlegging and expanded relevant police powers. Nonetheless, in 1965 the anti-bootlegging campaign turned up a total of only 70,000 cartons of illegal cigarettes. And bootlegging got much worse when, in 1968, the state tax jumped yet another 2 cents. In 1970, the city's stepped-up enforcement netted a stunningly slim 1,000 cartons of contraband cigarettes. This, though the State Department of Taxation said that more than 112,000 illegal cartons were entering the state every day. In 1972, the state tax rose to 15 cents per pack. Buttlegging boomed — and taxed sales fell. A study for then-Gov. Nelson Rockefeller linked a host of crimes to buttlegging — including "attempted murder, torture, kidnapping and armed robbery" — and concluded that efforts to enforce taxes were "completely ineffective and a failure." The report recommended a total repeal of the city's smoking tax. It never happened. In 1976, the state's Special Task Force on Cigarette Bootlegging and the Cigarette Tax again recommended abolishing the tax, citing an uptick in lethal crime associated with it. Now fast forward to 2001. State taxes rose to $1.11 a pack, and Gov. Pataki was forced to dedicate yet more tax dollars to battling buttleggers. He also signed into law a ban on cigarette sales on the Internet, which had been crippling local sales. (A federal court later struck down the Web-sales ban as unconstitutional.) In 2002, Mayor Bloomberg jacked up the tax from 8 cents to $1.50. Combined with a state tax that also grew to $1.50, New Yorkers now faced a tax bill of $3 per pack. It was a bootlegger's dream come true. And, sure enough, the Bureau of Alcohol, Tobacco and Firearms (ATF) has reported a surge in regional tobacco thefts, with spillover effects in nearby states. Since 2003, a violent wave of "cigarette wars" has hit town, leading to no less than three deaths. In one such killing, a black-market smokes dealer was killed for underselling a competitor. Says John Dugan, an area supervisor for the ATF: "When it comes to smuggling and counterfeit [cigarette] stamps, traditional organized crime is involved, terrorist groups are involved and street gangs are involved." Indeed, cops found counterfeit cigarette-tax stamps in the apartments used by the Egyptian Islamic Jihad group behind the 1993 World Trade Center bombing, a group that later merged with al Qaeda. Suspected members of an al Qaeda sleeper cell in Buffalo, the "Lackawanna Six," are said to have been involved in the trade, as have captured Hezbollah agents in North Carolina. No surprise there: The city's sky-high cig taxes have turned packs into gold. If it's raised another 50 cents, as Mayor Mike wants, a case of 60 cartons will have a retail price of nearly $5,000. This makes legal tobacco retailers a prized target for criminals. As one official at the Department of Taxation and Finance Tax Enforcement Office quipped, "In New York it is literally more profitable to hijack a cigarette delivery truck than an armored truck." Alongside jumps in illegal activity related to avoiding cigarette taxes, sales of taxed cigarettes in New York have fallen every time the state and city have increased levies. Which doesn't mean the hikes get New Yorkers to smoke less, but rather that they buy more cigarettes illegally or across state lines — and that legitimate retailers take a hit. Money that would go to New York grocers instead goes to North Carolina and other low-taxed locales. And consider this: Because everyone is avoiding the tax, revenues — so dear to lawmakers — don't even rise very much (if at all) from the hikes. In fact, quite the opposite: In 1994, when Canada cut its mindless $5-a-pack tax in half, revenues actually rose. Mayor Bloomberg's compassion is heartening, but it's folly for him to think himself capable of altering human nature through taxation. Slashing butt taxes — and thus freeing up tax dollars now spent to vainly enforce a levy that brings in comparatively little revenue — would strike a blow to New York's underworld. Call us old-fashioned, but we still believe that instilling kids with good habits is the job of their parents; a mayor's job is to go after organized crime and terrorists. If Bloomberg believes otherwise, he should at least be honest about it.

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