American Indians Fear Tobacco Tax Fixes May Hurt Them

Thu. May 1, 2008


Illegal sales of cigarettes are putting a big dent in government revenue, but there is concern among Native Americans that legislative changes in cigarette tax or distribution systems may hurt them. Contraband tobacco sales are not only hampering the ability of federal and local governments to rake in tax revenue, but the practice is also "funding international crime syndicates ... including Hezbollah," warned Rep. Anthony Weiner, D-N.Y., at today's hearing on tobacco smuggling by the House Judiciary Crime, Terrorism, and Homeland Security Subcommittee. Specifically, subcommittee members heard witnesses testify largely in favor of two bills to help crack down on the practice. One of them is Weiner's bill to make it more difficult to illegally sell cigarettes through the Internet and mail.

About 600 billion cigarettes are sold illegally worldwide each year, leading to a loss in government revenue of between $40 billion and $50 billion across the globe. In the United States, much of that money could be used to "fund health initiatives," said Crime, Terrorism and Homeland Security Subcommittee Chairman Bobby Scott, D-Va. Instead, a good chunk of the money is believed to be used to finance terrorist organizations such as Hamas, al-Qaida and Hezbollah. According to the GAO, Hezbollah alone profited $1.5 million from illegal tobacco sales worldwide between 1996 and 2000. Another bill introduced in April by Rep. Lloyd Doggett, D-Texas, and co-sponsored by more than 100 House members from both parties, would amend federal laws to make it more difficult for illegal vendors to sell counterfeit tobacco products. It would do so by making it easier to distinguish legal from illegal packages, and give more power to federal enforcement officials to prosecute those trafficking illegal cigarettes.

Anti-smoking lobbyists broadly welcomed the two bills, including the head of the Campaign for Tobacco-Free Kids. "These measures would increase the costs and reduce the profits from smuggling ... they would also close down lucrative opportunities for criminal and terrorist organizations," said Matthew Myers, president of the campaign. But there was concern among Native Americans about the legislation squeezing a major source of income for many tribes. State sales taxes are not applicable on Indian reservations, and many smokers go to them in order to buy cigarettes and other products at a discount.

by Shihoko Goto