All of the members of the Texas Senate Committee on Finance:

Steve Ogden, Chair
Judith Zaffirini, vice-chair
Members: Kip Averitt, Gonzalo Barrientos, Kim Brimer, Bob Deuell, Robert Duncan, Kyle Janek, Jane Nelson, Florence Shapiro, Elliot Shapleigh, Todd Staples, Royce West, John Whitmire and Tommy Williams.

HB3's authors: Representatives Jim Keffer and Kent Grusendorf

Senator Kel Seliger

Speaker of the House: Tom Craddick

Governor Rick Perry

The letter said:

Representative Tom Craddick
Room CAP 2W.13
P.O. Box 2910
Austin, Texas 78768

March 31, 2005


Re: HB3. This is an expanded version of the letter emailed and faxed to you this week. Included are pages from the GAO Report, a breakdown of taxes paid by smokers in Texas, and several articles addressing the concern.

Representative Craddick:

How could the Texas Legislature support terrorists! The U.S. General Accounting Office released a report in 2004 that said higher taxes on tobacco lead to illicit trafficking in tobacco and that terrorists groups are attracted to this illegal activity .

The Report states: "In addition, ATF reported in August 2003 that it had identified 8 of its investigations initiated in fiscal years 2002 and 2003 as linked to terrorism. ATF officials noted that the majority of its counterfeit cigarette investigations involve cigarettes smuggled into the United States."

San Mateo County Times, March 11, 2005,
"Funding Terrorism: No Butts About It," by Steve Geisser:
"SACRAMENTO — An emerging new tale of age-old certainties — taxes and death — begins in California with the flip of a cigarette butt and ends in Iraq with a bullet hitting a U.S. soldier. . . . But federal terrorism investigators told the San Mateo County Times on Thursday that such seemingly innocent legislation, further hiking high cigarette costs in California , would fuel their already tough battle against terrorist groups' lucrative smuggling operations in the United States. The disclosure by federal law enforcement officials comes as they are beginning to crackdown on illegal cigarette smugglers, who are providing a growing and crucial part of funding to terrorist groups such as al-Qaida and Hezbollah. Two new reports by a separate federal watchdog agency, the U.S. General Accounting Office, detail the multibillion-dollar problem."

In an email to me, Norman Kjono, who has a relative serving in Afghanistan, a son who will be in the graduating class of 2009 from the U.S. Naval Academy, a nephew attending the U.S. Naval Academy and a niece completing flight training in the U.S. Navy, said the following:

"The conclusion that increased cigarette taxes creates an extraordinary profit potential for
smugglers associated with terrorist groups is not conjecture, it is explicitly spelled out in the GAO report.

"It is a travesty that state legislatures would even consider new taxes that the U.S. Government Accountability Office and the U.S. Bureau of Alcohol, Tobacco, Firearms, & Explosives explicitly say can increase funding for terrorists groups because of the high profitability they create for cigarette smuggling operations. Our troops confront those terrorists in Afghanistan and Iraq daily.

" Hundreds of thousands of good families across this great land also have family members who serve in our defense in combat zones today as well.

"Do some politicians' compulsions to tax "Target Group" U.S. citizens result in a bullet in the back for our troops? Do many who allegedly decry the horrific events of September 11, 2001 now cavalierly support tax bills that can provide terrorists the resources to drop the Sears Tower in Chicago or destroy the Columbia Tower in Seattle as an encore?"

Mr. Kjono, who lives in Washington State, has written several articles on the subject. Enclosed you will find the pages of his article "Blood Revenue" that outline the GAO report.

Also enclosed is a 2002 article by Bruce Bartlett, which can be found on townhall.com, discussing this issue. Bartlett says: "Just last month, a member of the militant group Hezbollah was convicted of running a multimillion dollar smuggling operation out of North Carolina. Maryland Comptroller Donald Schaefer has said that there is evidence of similar operations in his state."

Bartlett also points out that increased tobacco taxes "further burden the poor, who are principally impacted by cigarette taxes."

Included is a summary sheet of taxes paid by smokers: State of Texas, 2002.

Don't tell me that raising the taxes on tobacco in Texas won't encourage smokers to buy their cigarettes elsewhere because I know better. This won't encourage them to quit but rather to buy their tobacco products out of state, out of the country or , as is the case with most consumers, where the price is the best. This tax also places an additional burden on those least able to pay.

How could the Texas Legislature do anything that would encourage terrorists? Were you just not informed and felt that you could get by with a cigarette tax increase because smokers don't have a large lobbying force? Need I remind you that we share a border with another country. That border offers easy access to Texas and the United States.

Wake up before it's too late.


Signature:

cc: Members of the Senate Finance Committee,
the authors of the bill, Governor Perry, Veterans

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