Tennessee is getting tough on cigarettes:

The Tennessee Department of Revenue said Friday that it will begin conducting surveillance of state-line tobacco retailers in other states, looking for Tennesseans who are buying cigarettes there to avoid taxes.

Tennessee residents may legally possess no more than two cartons of cigarettes without the state tax stamp.

In July, Tennessee’s cigarette tax went from 20 cents per pack to 62 cents per pack, an incentive for many Tennessee residents to cross the state line to buy cigarettes at stores in neighboring states.

This, to me, comes close to running afoul of how the Interstate Commerce clause ought to be read. On the other hand, having to register things that you’ve purchased out of state is not something new and when it comes to guns we do it all the time. So wanting the in-state stamp of approval is not something new. My question is why, then, does this bother me so much? It’s not a smoker’s issue, in my mind, as I would react the same way if it were beer or playing cards or anything else. Also, I wouldn’t be bothered if cigarettes were banned in the state overall.

I can figure out why Tennessee would want to do this. No matter where you live within the state, you’re not too far from another state. So it would make sense that Tennessee, a high-sales tax state, would be touchy on this issue. So I came around to the idea that maybe giving people skirting the law a ticket would not be such a terribly bad idea. Then I read this:

Contraband cigarettes, and any vehicle in which they are transported, are subject to seizure, Farr said.

“If Revenue agents believe that an individual is transporting more than two cartons of cigarettes into Tennessee, the vehicle carrying the cigarettes will be stopped and searched,” Farr said. “If more than two cartons are found, the cigarettes will be seized and agents have the discretion to make arrests and seize the vehicle.”

That is an awful lot of discretion for a state police officer to have. I love the police, I do, but I don’t want them to have the power to decide whether to take someone’s five-year investment for getting some cigs while out of state.

I guess the main reason I am really uncomfortable is that this something that someone like me has done. Like Tennessee, Delosa is a high-sales-tax state with higher cigarette taxes than surrounding states. I would never go out of state for the sole purpose of buying cigarettes, but whenever I was out of the state I would make a point of picking some up. I actually did so even before I was a smoker because Mom would ask me to. I suppose if I heard about it the people of Tennessee have been warned about the consequences of doing such, but nonetheless people could face some pretty stiff consequences for committing a crime that it wouldn’t even occur to them is a crime. Also, this is not a new law. Even before this recent spate of publicity an officer could, if he wanted to, seize someone’s car for trying to skirt a little bit of sales tax.

Not sure about Tennessee, but in Delosa everyone skirts sales tax any time they leave the state. By Delosa state law, anything you purchase out of the state, you’re supposed to voluntarily pay state income tax. Nobody ever does, but the law is there. There was a hub-bub a couple years back when the State Treasurer slapped a fine on the Insurance Commissioner (both of whom were gearing up to run for the same higher office) for buying a bunch of furniture outside state lines and not paying the taxes on it. It all backfired on the Treasurer because everyone pretty much said “Holy crap! That’s illegal?!” and feared that the Treasurer would go after them next.

That’s just nuts.

State officials estimate that annually the new tax will bring in $195 million for education, $21 million for agricultural enhancements, and $12 million for trauma centers.

While I’m on the subject, couldn’t they at least pretend that this tax — a tax that will disproportionately target the poor and uneducated, I might add — has something (or at least more than 5%) to do with the public health?


Category: Statehouse

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5 Responses to Smokeys on Tobacco Road

  1. Peter says:

    Connecticut used to do something similar with respect to alcohol. Prices for all types of alcoholic beverages except beer were much higher than in any of the neighboring states due to some weird state law designed to protect the liquor-store industry. Connecticut was chock-full of tiny liquor stores, at one point having more than Texas. Not surprisingly, many people went to New York, Massachusetts or Rhode Island to buy liquor. Connecticut’s very small size made this easy for most people.

    It didn’t take long for the liquor control authorities to catch on to this. They began stationing agents in the parking lots of larger liquor stores in neighboring states, to take down the license plate numbers of Connecticut-registered cars so the drivers could be stopped as they re-entered the state with their “contraband” liquor. The practice pretty much ended when the out-of-state liquor store owners began throwing the Connecticut agents (who had no legal authority outside of Connecticut) from the parking lots, and sometimes calling the local police on them. Connecticut eventually changed its laws to reduce the price gap on alcohol and it no longer was worthwhile for residents to go outside the state.

    Not sure about Tennessee, but in Delosa everyone skirts sales tax any time they leave the state. By Delosa state law, anything you purchase out of the state, you’re supposed to voluntarily pay state income tax. Nobody ever does, but the law is there.

    It’s actually called a use tax, though some states have a line on their income tax returns for reporting it. It’s also possible in most cases to avoid sales tax by making purchases through online sellers like Amazon. According to the Supreme Court, an online or mail-order seller can’t be required to collect sales tax on sales to residents of a particular state unless it has a physical presence (store, distribution center, factory etc.) in that state.

  2. Webmaster says:

    Wisconsin had crazy laws regarding margarine for a long time, to protect the dairy industry (it competes w/ butter). There was a time people made “oleo runs” to Illinois to buy colored margarine when butter was being attacked as “unhealthy” (of course, we now know margarine and trans fats are a whole heck of a lot worse).

    I do agree that this probably violates the interstate commerce clause, but then again, so do the various liquor laws that prevent the shipping of alcohol from certain states into other states as well. I can’t get a good Door County cherry wine where I am because of that.

  3. Rob says:

    I am not clear on the sales tax as a “use tax” if I move from one state to another, I don’t have to pay “use tax” on all the stuff I bring in do I?

  4. Peter says:

    Rob –
    The rule in most states is that you owe use tax if you buy things without having paid sales tax to any state, for example if you make purchases through Amazon or eBay or another online seller that doesn’t collect sales taxes. If you travel into another state and pay that state’s sales tax on your purchases, you generally don’t own your own state’s use tax. There also are exemptions in most places for people who move from one state to another.

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