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For the full story: http://www.forces.org/writers/kjono/files/blood-money.htm

Blood Revenue

By Norman E. Kjono March 27, 2005

Earlier in this Washington legislative session HB 2075, proposed legislation for a $1.00 per pack new cigarette tax, failed. Shortly after that bill failed Washington Governor Gregoire submitted her budget to the legislature. New revenue sources in that budget include an 20 cents per pack immediate increase in cigarette taxes, to be followed by an increase to 80 cents per pack tax in 2007. Governor Gregoire crafted that proposal to be a “sure thing:” the proposal would fund Initiative 278, providing for decreases in class size and a funding source for teachers’ pay raises. The two bills recently introduced to enact that portion of the Governor’s proposed budget, HB 2302 and SB 6096, are discussed in this commentary.

As this is written a Sgt. named Mike is serving with U.S. Army Special Operations in Afghanistan . He is scheduled for rotation back to Fort Lewis in Washington this July. Assuming all goes according to schedule, my brother will be visiting from Hawaii in July. My brother and his wife plan to greet her son when he comes home. Like hundreds of thousands of American families with members serving in our military today we wish Mike Godspeed and a safe journey home. I look forward to my brother’s visit. Not only will it be a pleasure to yak and catch up, but I would also like to say thank you to Mike and his comrades in arms for their service.

GAO and ATF Conclusions

The U.S. Government Accountability Office published GAO-04-641, Cigarette Smuggling: Federal Law Enforcement Efforts and Seizures Increasing dated May 28, 2004. A three page excerpt of relevant pages from that report can be accessed at GAO-04-641.PDF . A few of the conclusions in that report are as follows:

1. Summary Page: “Cigarette smuggling results in lost tax revenues, undermines government health policy objectives, can attract sophisticated and organized criminal groups, and could be a source of funding for terrorists.”

2. Summary Page: “According to ATF, illegal cigarette trafficking worldwide is a multibillion dollar a year crime phenomenon, with some cigarette smugglers having ties to terrorist groups.”

3. Page 6: “Indications are that the possibility of making huge profits has attracted criminals, including international and domestic organized crime groups, to smuggling.”

4. Page 7: “According to an ATF report, some cigarette smugglers have ties with terrorist groups, and there are indications that terrorist group involvement in illicit cigarette trafficking, as well as the relationship between criminal groups and terrorist groups, will grow in the future because of the large profits that can be made.”

5. Page 7: “Many states, as well as foreign countries, have increased cigarette taxes, resulting in a large difference in the wholesale price and price paid by consumers at the retail level and creating potential illicit profits of $7 to $13 per carton of cigarettes.”

NOTE: At more than $14.00 per carton Washington’s cigarette tax is already beyond the $7 to $13 threshold ATF says creates large illicit profits for terrorists. Governor Gregoire’s proposal would add $2.00 then $8.00 more potential profits to terrorists, ultimately producing a handsome return for Osama bin Laden et al of $22.00 per carton. One penny per pack of new cigarette taxes makes the illicit cigarette trade terrorist problems worse, let alone adding $8.00 per carton incentive.

6. Page 7: “According to ICE officials, states with higher cigarette excise taxes are generally the states that lose cigarette tax revenue due to smuggling.”

7. Page 7: “States could also lose other revenue. The Master Settlement Agreement, signed in November 1998, . . . requires four of the nation’s largest tobacco companies to make annual payments to states. . . . The annual payments are to be adjusted downward when a cigarette manufacturer’s sales volume decreases, such as lost sales because consumers purchased smuggled cigarettes instead of legitimate cigarettes.

Our troops do not confront organized armed services of a sovereign nation in Iraq and Afghanistan. Indeed, many of our operations in Afghanistan have been focused on locating and capturing Osama bin Laden, leader of the terrorist group that destroyed the World Trade Towers in New York and attacked the Pentagon September 11, 2001. The enemy our troops confront in both theatres of war are, by and large, terrorists who are members of terrorist organizations cited by GAO and ATF in their reports about cigarette taxes. Such groups must, therefore, seek alternative – often illicit – means to finance their operations.

The extraordinary profitability of cigarette smuggling – made possible in large part by anti-tobacco activists who receive special-interest grants from the pharmaceutical Robert Wood Johnson foundation in Princeton, New Jersey– makes that illicit activity an attractive and relatively low risk source of finding for terrorist groups. I have little doubt that terrorist cell members would consider running smuggling operations within the borders of the United States to be light duty compared to blowing themselves up with a car bomb in Baghdad. As GAO points out, raising cigarette taxes increases the attractiveness of smuggling operations because the economic benefits derived therefrom also expand in direct proportion.  The link between increasing cigarette taxes and putting our troops at risk is therefore for direct, compelling and not at all tenuous or exaggerated.

Politicians who still support new cigarette taxes being levied on their personal “Target Group” of choice, persons who smoke, cannot plead ignorance of the above conclusions reported by GAO and ATF. The GAO report is dated ten months ago in May 2004 and the press has written about that report in the specific context of terrorists and placing our troops in harm’s way.

From the 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. . . . 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. Two new reports by a separate federal watchdog agency, the U.S. General Accounting Office, detail the multibillion-dollar problem. . . . ‘The illicit sale of cigarettes and other commodities by terrorist groups and their supporters has become a crucial part of their funding activities,' said William Billingslea, a senior intelligence analyst for the Office of Strategic Intelligence and Information in the Bureau of Alcohol, Tobacco, Firearms and Explosives in Washington. 'Raising the tax on cigarettes widens the difference between the wholesale and retail price and inadvertently creates opportunity for traffickers, who evade the tax and gain the profits,' he said. . . . 'Illicit cigarette trafficking now rivals drug trafficking as the method of choice to fill the bank accounts of terrorists,' Billingslea said. 'Each state that raises its cigarette taxes is a new prospect for illicit profits gained by trafficking in cigarettes.'" (Underline added.)

Christine O. Gregoire, meet Jane Fonda. Jane Fonda apparently found it to be fashionable to be photographed sitting on a North Vietnamese anti-aircraft gun battery. Christine Gregoire goes one better: she seems to regard as politically correct providing shells to load the guns. So who pulls the trigger, RWJ foundation grant recipients? Do some politicians’ compulsions to tax “Target Group” U.S. citizens result in a bullet in the back for our troops?

The risks to all of us from such terrorist operations are not limited to combat zones in foreign lands. The same funding that can purchase munitions to supply terrorists in Fallujah can also supply logistic support for another September 11 attack here in the USA . 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 Towerin Seattle as an encore?

Osama bin Laden, meet Al Capone. It’s a shame that Osama’s potential profits would be increased by Washington Governor Gregoire’s eighty-cents-per-pack new tobacco tax brainstorm. While ATF informs California legislators that any increase in the cigarette tax makes an already-significant problem worse Governor Gregoire’s response is to pile on $8.00 per carton more profit opportunities for Osama’s gang. At least state governments were not raking in a percentage of Al’s revenues, while turning a blind eye to the consequences of his operations.

For the full story: http://www.forces.org/writers/kjono/files/blood-money.htm