An old friend sent me the link to an article and suggested I might want to chime in on the issue. Boy was he right.
Tom Humphrey wrote a piece yesterday at KnoxNews.Com titled ‘Cigarette Surveillance Program Begins Today‘ detailing the practical results of an outrageous law being used by a government unfamiliar with the concept of Public Service.
At issue is enforcement of Tennessee tax law whereby
…state Department of Revenue agents will begin stopping Tennessee motorists spotted buying large quantities of cigarettes in border states, then charging them with a crime and, in some cases, seizing their cars.
Why might Tennesseans be shopping for cigarettes out of state? You may remember that
Tennessee’s cigarette tax went from 20 cents per pack to 62 cents per pack effective July 1. All eight states that border Tennessee have lower tax rates, meaning smokers can save up to 45 cents per pack — $4.50 for a 10-pack carton — by purchasing out of state.
I’m here in Hermitage but am reminded of Berlin. Specifically The Wall. It was used, not to keep people out of East Germany, but to prevent those content, happy, prosperous East Germans from leaving. Concerned that Tennesseans might make a legal purchase out of state to save money, the State of Tennessee has decided to erect The Volunteer Wall around Tennessee to force its citizens to remain in Tennessee to buy their smokes. If they don’t, then, as Tom Humphrey notes
Under state law, bringing more than two cartons of cigarettes into the state without paying Tennessee taxes is a “Class B” misdemeanor, carrying punishment of up to six months in jail and/or a $500 fine. Bringing 25 or more cartons is a “Class E” felony, with minimum penalty of one year in prison and a maximum of six years plus a fine of up to $3,000.
In addition, the specific state statute dealing with untaxed cigarettes provides that vehicles used to transport more than two cartons “are considered contraband and are subject to seizure,” says a Department of Revenue statement.
Farr said that agents have been instructed to seize any vehicle carrying more than 25 cartons of cigarettes without Tennessee tax stamps. In cases where three to 24 cartons are involved, he said vehicle seizure is “at the officer’s discretion.”
I spoke with Sophie Moery, the Tennessee Department of Revenue Communications Director, to find out exactly what is illegal under the statute. Sophie helpfully directed me to Tenn. Code Ann. 67-4-1019 through 67-4-1024 where the law is found. She also spent a great deal of time with me discussing the law and its implications.
In my opinion, this law is schizophrenic. It appears intended to ensure cigarettes sold in TN have been properly taxed. I have no problem with that. Goods sold in Tennessee should be taxed appropriately and those taxes should be properly collected and paid. If they are not, the Department of Revenue should investigate, arrest, prosecute and punish offenders. Certainly, under this law, smugglers and cigarette counterfeiters are subject to prosecution.
But the law is much broader than that. Anyone having more than 20 packs of cigarettes without a TN tax stamp is assumed to be involved in tax evasion or other crimes unless he can prove otherwise. So much for innocent until proven guilty. All that’s needed is possession of two cartons of legally purchased Kentucky cigarettes and one pack more in your pocket. That one extra pack is contraband and qualifies you for arrest and seizure of not just the one pack but of your vehicle as well. Having over 25 cartons of unstamped smokes automatically triggers your vehicle’s confiscation. From 2 to 25, it is left up to “the officer’s discretion”. That’s just scary!
The good folks at the TNDOR are saddled with a no-win situation. The law is sufficiently vague and broad that abuse seems probable as opposed to merely possible. But the TNDOR is tasked with enforcing the law and they’re doing their job. My beef is not with them! The troublemakers are not law enforcement but lawmakers. If this bothers you, too, contact your legislator and let him know you’d like the law changed. Until then, the TNDOR is trying to get the word out about the law so ordinary Joes with a habit don’t find themselves smoked for smoking.
I propose clearly making it illegal to sell cigarettes in Tennessee without adhering to appropriate state tax law. Identifying offenders should depend on investigation and evidence, not mere verification of possession. Simple possession of some drugs is illegal since the drugs themselves are illegal. It is not illegal to have cigarettes in Tennessee or even to have cigarettes in Tennessee which you purchased out of state. It is, however, illegal to have over a certain number of them. That’s bad law.
Sophie mentioned possible rationales used when crafting the legislation we now have although it’s unclear when that was. These include loss of revenue to Tennessee retailers; creation of a disadvantage for Tennessee retailers and combating smuggling and counterfeiting. It seems more likely the motivation was more selfish – losing state revenue. The recent cigarette tax increase was to fund specific programs. If the tax revenue goes down, that could be problematic. If stopping the riptide of tax dollars heading away from Tennessee means punishing smokers even more than raising their taxes, your legislature is happy to use the rod of the TNDOR to make that happen and The Volunteer Wall is born.
Sophie noted, prior to the increase, Tennessee had lower tax rates than some surrounding states and people came here to buy smokes. I don’t recall TNDOR being dispatched to the border to turn them away or confiscate their purchases. Did legislators not understand the consequences of their actions? This should not have been difficult to see coming. I feel badly for retailers hosed by the state, but when did we make the state responsible for ensuring retail profits? Who legislated the retail disadvantage in the first place? When will the state, as it so often does in the area of taxation, stop making its own citizens automatic criminals? And when will The Volunteer Wall, erected to keep Tennesseans and their money in Tennessee, come down?
Wondering if “Mr. Naifeh, tear down this wall!” has the same ring …
Blue Collar Muse
NOTE: Many thanks to both Tom Humphrey at KnoxNews.Com and Sophie Moery at TNDOR for their help and information.
Is Tennessee’s Government Guilty of Usurpation? at One Hand Clapping
Tennessee Revenue Commissioner to Conduct Surveillance at Frankly Speaking
Revenue Plans for Cigarette Surveillance at State Line at State of TN Website
Terry Frank and I Agree. I Presume Hell has Frozen Over at Tiny Cat Pants