WASHINGTON, DC -- A federal proposal to raise the price of cigarettes by $1.10 a pack may not reduce teenage smoking -- but it will probably leave dead bodies littering America's streets and be a financial bonanza for organized crime, the Libertarian Party warned today.

"This will be the most deadly tax increase in American history," predicted Steve Dasbach, the party's national chairman.

"This tax will boost the price of cigarettes so much that they'll become irresistible to criminal gangs," he said. "This tobacco tax could launch the second Golden Age of organized crime -- which is what happened in Europe and Canada when similar tax hikes were enacted."

This week, the Senate Commerce Committee endorsed a plan to force tobacco companies to pay "licensing fees" that would boost the cost of cigarettes by $1.10 a pack.

In response, President Bill Clinton urged a larger increase -- up to $1.50 a pack -- in order to reduce teenage smoking. And 26 states are considering additional tax hikes on cigarettes.

As a result, cigarettes in America could cost more than $3.56 a pack by the year 2002, estimates the Smith Barney Tobacco Research company.

But such tax hikes ignore the bloody price society pays for highly taxed cigarettes, said Dasbach.

"This cigarette tax hike is a recipe for Prohibition III -- following the same blood-soaked trail as alcohol prohibition and drug prohibition," he said. "And, as with previous experiments in prohibition, law-abiding citizens will suffer and criminals will prosper."

What can Americans expect when criminal gangs can suddenly make lavish profits by smuggling cigarettes? Just look at Germany, where cigarettes already cost $3.60 a pack, thanks to a 90% government tax.

• In Germany's capital, "the smuggling of cigarettes [caused] a surge in gangland-style executions and turf wars [that] made Berlin streets more dangerous than at any time since World War II," reported the Washington Times. "Authorities fear that cigarette trafficking is leading to crime empires dealing in extortion, prostitution, stolen cars, drugs, and weapons."

• "People are being executed in cold blood in their apartments and in broad daylight on the streets, on subway platforms, in front of hundreds of witnesses," said Detlef Schade, a police detective in Berlin.

• "Turf battles between the Vietnamese gangs that control street-level sales have been blamed for the deaths of 40 Vietnamese, 15 in Berlin alone [in 1996]," reported USA Today. These killings are "the latest episode in a bloody gang war over Berlin's lucrative trade in smuggled cigarettes."

Why the brutal battles? Because a single truck "loaded with 50,000 cartons can net a smuggler $550,000" in profits, said USA Today.

In fact, all across Europe, high taxes are resulting in a bonanza for smugglers, reported syndicated columnist Bruce Bartlett. "One-fourth of the world's cigarettes are now smuggled across national borders to evade taxes and tariffs," he wrote. "Governments are already losing $16 billion per year in tax revenues -- a figure likely to rise as organized crime becomes a larger player in the business of smuggling smokes. In Italy alone, organized crime is said to make $500 million per year smuggling cigarettes."

Or, closer to home, look at what happened in Canada when the government raised tobacco taxes by 146% -- to 75 cents a pack -- in 1991, according to a report in Reason magazine:

• "The result was an invitation to organized crime. Mohawk Indians from tribes along the U.S.-Canada border, biker gangs, and Asian Triads smuggled cigarettes across the border in boats, airplanes, trucks, legitimate courier companies, and snowmobiles. By the end of 1993, nearly one in three cigarettes was contraband."

• "Retailers also [became] victims of a crime wave, as it became more lucrative for thieves to skip the cash register and head straight for the cigarettes."
  

Even more surprising, despite the steep tax hike, "youth smoking did not decrease and many officials ironically argued that high taxes made it more difficult to control youth smoking," reported Erin Schiller of the Pacific Research Institute.

By 1994, shaken by the crime explosion and lost tax revenues, Canadian Prime Minister Jean Chretian said the cigarette tax threatened "the very fabric of Canadian society" -- and drastically reduced the tax burden, "which essentially eliminated cigarette smuggling in Canada," reported Reason magazine.

Even Canadian Health Minister Diane Marleau argued the tax cut was needed to "end the smuggling trade and force children to rely on regular stores for their cigarettes" -- where purchases could be better controlled.

But Washington politicians seem determined to ignore the lessons of Canada and Europe, and inflict the same bloody crime wave on America, said Dasbach.

"Opportunistic politicians may think they are striking a blow against Big Tobacco with this tax hike -- but they are actually striking it rich for criminal gangs," he said. "The biggest supporters of this new tax are not the Republicans or Democrats, but the Mafia, the Asian Triads, the biker gangs, and the Russian mob, who stand to make billions of dollars in black market profits.

"And the biggest victims of the $1.10 cigarette tax hike will not be R.J. Reynolds -- but ordinary Americans who will die in the crossfire as criminal gangs battle for the blood-stained profits that politicians seem determined to give them. That's the real cost of this tax increase."

Sources:

• Vietnamese crime syndicates smoke with German smuggling, by Erik Kirschbaum, The Washington Times (February 3, 1996)
• Smuggling hard to snuff out, by Paul Geitner, USA Today (June 13, 1996)
• Tobacco Road, by Ed Carson, Reason magazine (February 7, 1995)
• Smoking Up North, by Erin Schiller (Pacific Research Institute), The Washington Times, February 11, 1998
• When the clouds of smoke settle, by Bruce Bartlett, The Washington Times (August 28, 1997)
• Cigarette tax becoming states' levy of choice, by Carl Weiser, USA Today (March 17, 1998)

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