NewsBriefs BUTTONS

Tobacco Industry Says Restrictive Legislation Will Lead to Black Market


May-June 1998

Responding to the Senate Commerce committee tobacco bill, the tobacco industry and some Congressional Republicans have claimed that such legislation would drive some companies out of business, create a black market for cigarettes, and is simply a "tax and spend" measure by "big government" (Associated Press, "Tobacco ads painting government as bad guy," Chicago Tribune, April 25, 1998, s. 1, p. 16).

U.S. Senator John McCain (R-AZ) proposed a measure (S.B. 1415) which would have raised the cost of a pack of cigarettes by $1.10, forced the industry to pay an estimated half-trillion dollars over the next 25 years, and would have restricted severely the industry's ability to market its products. House Speaker Newt Gingrich (R-GA) denounced the McCain bill, but President Clinton supported it. On April 1, the Senate Commerce committee approved McCain's bill by a vote of 19 to 1. On May 14, the Senate Finance Committee approved the measure and voted to increase the proposed additional $1.10-a-pack tax on cigarettes to a $1.50 (Alissa J. Rubin, "Tough Anti-Tobacco Bill Advances to Senate Floor," Los Angeles Times (Washington Edition), May 15, 1998, p. A5).

The tobacco industry launched an ad campaign saying that the McCain measure would have created a black market for cigarettes, in which foreign interests would smuggle cigarettes and hire gang members to sell them to anyone, including children. It said the legislation would have created more than a dozen new government bureaucracies to regulate everything from tobacco sales to the teenage smoking rate. Gingrich said he would resist a price increase so big that it might create a black market (Jeffrey Taylor and Jeanne Cummings, "Gingrich States Goals On Tobacco," Wall Street Journal, April 24, 1998, p. A16; Alan Greenblatt, "Critics Warn of Black Market Despite Efforts To Include Safeguards in Tobacco Bill," CG Quarterly, May 2, 1998, p. 1153).

U.S. Rep. Tom DeLay (R-TX), House majority whip, wrote, "If we increase tobacco taxes, we will just create a black market for cigarettes and cigars -- a market that will likely be violent and that certainly will not pay any taxes. We already have illegal drugs pouring across our borders. And there's plenty of evidence that smokes would be no different" (Tom DeLay, "No New Taxes. No, Not Even On Cigarettes," Wall Street Journal, April 22, 1998, p. A22).

One tobacco industry advertisement includes statements from police unions. In a letter to U.S. Senator Orrin Hatch (R-UT), dated April 24, 1998, the Fraternal Order of Police wrote, "We are extremely apprehensive that passage of this legislation will precipitate the emergence of a thriving black market in cigarettes, posing huge problems for law enforcement at every level." In a similar letter to Hatch, the International Union of Police Associations wrote, "If successful, the [tobacco] legislation will spawn a large and burdensome black market that would impose an additional burden on law enforcement agencies already under severe manpower pressure" (Advertisement, New York Times, May 11, 1998, p. A11).

Another tobacco industry ad reads, "Washington is getting ready to raise the price of tobacco products so high, it would create a black market and provide our children with unregulated access to cheaper tobacco products. According to the Fraternal Order of Police, legislation now being considered `will have the net effect of increasing the number of criminals on the streets, undercutting the achievements of law enforcement in this country, and exploding the ranks and profits of organized crime'" (Advertisement, Wall Street Journal, May 4, 1998, p. A13).

On June 17, the Senate voted to effectively kill McCain's tobacco bill by sending it back to the Commerce Committee. The vote was largely partisan with Republicans voting the kill the measure. Democrats promised to use the bill's defeat as an election year issue and attach the measure to every piece of legislation on the House and Senate floors (Alissa J. Rubin, "Republicans in Senate Kill Tobacco Bill," Los Angeles Times (Washington Edition), June 18, 1998, p. A1; David E. Rosenbaum, "Senate Drops Tobacco Bill With '98 Revival Unlikely; Clinton Lashes Out at G.O.P.," New York Times, June 18, 1998, p. A1).

[Congressional Republicans and law enforcement officials claim to have concluded that higher taxes -- demonstrated to effectively reduce cigarette smoking -- will create a black market that jeopardizes children and the public safety. Prohibition policies, which over the long run have failed to reduce drug use, in fact have created a black market in "controlled substances." These people, however, claim to believe that prohibition policies protect children and the public safety. -- RCT]

Tobacco industry campaign - Tel: (800) 343-3222, Web: <>.

Rep. Tom Delay - 341 CHOB, Washington, DC 20515, Tel: (202) 225-5951, Fax: (202) 225-5241.

House Speaker Newt Gingrich - 2428 RHOB, Washington, DC 20515, Tel: (202) 225-4501, Fax: (202) 225-4656.

Sen. John McCain - 241 Russell Bldg., Washington, DC 20510, Tel: (202) 224-2235, Fax: (202) 228-2862.

Fraternal Order of Police - 400 5th St., NW, Washington, DC 20001, Tel: (202) 347-6929.

International Union of Police Associations - 1421 Prince St., Suite 330, Alexandria, VA 22314, Tel: (703) 549-7473, Fax: (703) 683-9048.