California, ever the trendsetter, has inspired proposed congressional legislation aimed at cracking down on tobacco smuggling and increasing cigarette tax revenues.
The Smuggled Tobacco Prevention, or STOP, Act would require that tobacco products carry a high-tech stamp, similar to one used in the Golden State, that allows government investigators to track cigarette packages and determine whether taxes were paid and whether tobacco is being diverted to illegal markets.
The measure is modeled after a California program that began in 2005 and has reduced cigarette tax evasion by $133 million annually, according to the State Board of Equalization.
“Black market cigarettes are robbing our coffers of a critical revenue source that we need to pay for vital domestic programs like health insurance for children,” said Sen. Frank Lautenberg (D-N.J.), the bill’s chief Senate sponsor.
The Justice Department estimates that tobacco smuggling costs federal and state governments at least $5 billion in lost revenue annually, bill sponsors say.
Rep. Lloyd Doggett (D-Texas), lead sponsor of the bill in the House, called tobacco products “the single largest illegally trafficked legal product on the planet.”
Doggett said the legislation “imposes new labeling and record-keeping requirements to allow better tracking of tobacco products to keep cheap, smuggled tobacco out of the hands of our children. This will help the government increase its tobacco tax receipts without increasing taxes.”
Although the Tobacco Control Act authorizes the FDA to develop a cigarette tracking system, the proposed legislation “outlines with more specificity how a federal track and trace system would be implemented –- through a high-tech marking like that already being used with great success in California,” said a Doggett aide. It also includes a requirement that tobacco products intended for export are clearly marked as “not for sale in U.S.” to prevent illegal reentry, the aide said.
The measure won the endorsement Friday of the Campaign for Tobacco-Free Kids.
Similar legislation was introduced last year but never made it to the House or Senate floors.
The American Wholesale Marketers Assn., in a paper on its website, expressed concerns about last year’s similar legislation, saying “who would be responsible for the costs associated with the adoption of the federal digital stamp” and “the potential for new and burdensome reporting and record-keeping requirements.”
David Sutton, a spokesman for Altria, said the tobacco company would need to study the legislation before taking a position, but added, “We’ve long supported efforts to address contraband cigarette trafficking…. We believe the highest priority right now is to focus on implementing and enforcing existing laws.”