Comptroller’s bust underscores importance of tax stamps
Nov 25, 2019 at 4:36 PM
The recent announcement from the Maryland Comptroller’s Office that state agents had seized nearly half-a-million dollars’ worth of untaxed tobacco products in raids across Prince George’s County (“'Floor to ceiling’: Maryland comptroller touts biggest tobacco bust in state history,” Nov. 20) illustrates the scope of interstate smuggling and fraud involving tobacco products and the critical importance of security solutions that allow state officials to identify and counter illicit activity.
Research by the Centers for Disease Control and Prevention found that between 8% and 21% of all cigarettes consumed in the United States avoid or evade taxes, equating to between $2.95 billion to $6.92 billion in lost local and state revenues every year — and that doesn’t include other tobacco products. The stark differences between tax rates and enforcement structures that exists between states creates a powerful incentive for criminals to try their luck at purchasing tobacco products in a lower-cost state and reselling them illegally in a higher-cost state. In the Maryland case, this played out as those involved in the scheme purchased tobacco products over the border in Pennsylvania and transported them illegally to Maryland for resale.
The continued efforts of criminals to make a profit selling black market tobacco products reinforces the need for comprehensive solutions that allow for greater transparency in the tobacco supply chain and enable state officials to more readily identify illicit activity. In Maryland, each legitimate pack of cigarettes is marked with a secure, counterfeit-resistant tax stamp, which allows regulators to track the products’ movement and ensure that appropriate taxes are collected. Along with the continued efforts — and sharp eyes — of state officials, these secure stamps are critical to both safeguarding vital state revenue and ensuring public health by helping to prevent black market cigarettes from intermingling with legitimate products. As the recent bust illustrates, however, the profusion of tobacco products other than cigarettes including cigars, loose tobacco and vaping products are creating new opportunities for criminals to illegally resell products not currently included in the secure tax stamp system.
Enforcement actions like this one are the result of concerted efforts to build public awareness and create secure systems to counter illicit trade in tobacco products and they reinforce the importance of broadening secure systems to include all tobacco products, not only cigarettes. Officials in Maryland deserve kudos for working so proactively to snuff out illicit activity, safeguard state revenue and protect public health.
Alexander Spelman, Springfield, Va.
The writer is vice president at SICPA North America which provides secure tax stamps to Maryland and more than 40 other U.S. states.