Stop Saying New York's Untaxed Cigarettes Are Funding Terrorism

A sheriff's deputy uses a special light to check counterfeit stamps on a pack of cigarettes.
A sheriff's deputy uses a special light to check counterfeit stamps on a pack of cigarettes.
Jon Campbell for the Village Voice

The Wall Street Journal on Sunday published an op-ed on a subject that the Voice has been following for a little while: smuggled, untaxed cigarettes.

Titled "A Laffer Curve for Smokes," the Journal piece made the case that high cigarette taxes — like New York's — are actually resulting in less revenue for states that have imposed them. The piece, written by Patrick M. Gleason, director of state affairs for Americans for Tax Reform, also repeated a common argument about cigarette smuggling that doesn't seem to be borne out by the facts: that cigarette smuggling funds terrorism.

After explaining that high taxes tend to create a black market, Gleason goes on to say that "those black markets direct some money toward nefarious causes." Namely, he argues, terrorism.

Say "terrorism" and people start to listen, especially in New York. And Gleason is hardly the first to try to infer that the Arab-owned corner store selling a few packs of out-of-state smokes is nothing but an Al Qaeda front. But there is almost no evidence to suggest that this is true. Of course, it's impossible to prove a negative, but it is possible to look at the most frequently cited bits of evidence for this claim and see how readily they fall apart under even cursory examination.

See also: Mule: Adventures in the Illicit Tobacco Trade

Gleason cites a case from 2013 that's often held up by those who make this argument, most commonly law enforcement officials. That year, then–police commissioner Ray Kelly held a splashy press conference about how the NYPD had broken up a large smuggling ring, and arrested more than a dozen Palestinian nationals.

At the time, many news organizations quoted Kelly implying that the money gained from the cigarettes was going to support terrorist groups. One piece of evidence Kelly cited at the news conference was a link between one of the suspects and Rashid Baz, the convicted murderer of Ari Halberstam. On the Brooklyn Bridge in 1994, Baz opened fire on Halberstam and the group of Jewish students he was traveling with, a crime that was later categorized as a terrorist act.

But Baz had been in prison for nearly twenty years by the time Kelly linked him to the cigarette-smuggling ring. And more importantly, not a single defendant in that case was ever brought up on terrorism charges.

Academic researchers have also found no link between cigarette-smuggling and terrorism. A report released in February by the National Research Council and the Institute of Medicine — probably the most comprehensive study of the U.S. illicit cigarette market to date — explicitly reported no significant link between terrorism and cigarette-smuggling:

Although many claims have been made regarding the relationship between the illicit tobacco trade and terrorism, the link between the U.S. illicit tobacco market and terrorism appears to be minor, and there is also no systematic evidence of sustained links between the global illicit tobacco trade and terrorism.

The fact that Americans for Tax Reform would seek out any and all arguments to make their central point — TAXES BAD! — isn't too surprising. Founded by anti-tax firebrand Grover Norquist, ATR is a tax reform group in the same way the FDNY is a fire management organization. They don't seek to reduce taxes, or to simply tweak the tax code. They essentially oppose all forms of taxation, or at least all tax increases. (This is not hyperbole — the group's website tells us bluntly that "Americans for Tax Reform (ATR) opposes all tax increases as a matter of principle.")

But Gleason, in trying to make his case, also appears to have engaged in a bit of selective editing. He pointedly quotes the Washington Post, a paper no one would accuse of being a right-wing propaganda factory, citing this sentence:

"Smugglers with ties to terrorist groups are acquiring millions of dollars from illegal cigarette sales and funneling the cash to organizations such as al Qaeda," the Washington Post reported in 2004.

Those words did indeed appear in the Post in 2004. But Gleason omitted a somewhat key qualification:

"Smugglers with ties to terrorist groups are acquiring millions of dollars from illegal cigarette sales and funneling the cash to organizations such as al Qaeda and Hezbollah, federal law enforcement officials say, prompting a nationwide crackdown on black market tobacco." (Emphasis ours.)

The Post piece Gleason cited came directly after so-called "Operation Smokescreen," which involved a group of smugglers who ran a large operation out of North Carolina. Out of all the people charged in the case, most were never charged with any terror-related offenses. There was one such charge that stuck; Mohamed Hammoud was ultimately convicted of "providing material support" for a terrorist group, after it was discovered that he donated $3,500, of the millions he supposedly made carting smokes, to the Lebanese organization Hezbollah. (The decision was upheld on appeal, and the facts of the case can be reviewed here.)

Hezbollah is designated by the U.S. government as a terrorist entity, though not all Western governments view the group, which holds a bloc of seats in the democratic Lebanese parliament, the same way. But regardless of its designation, to portray a $3,500 donation as evidence that a massive, multimillion-dollar smuggling operation was a front for terrorism is a bit of a stretch. That would be an immensely inefficient fundraising effort.

Gleason didn't respond to the Voice's detailed questions about his opinion piece. The Wall Street Journal, likewise, did not respond to questions as of press time, but we'll update the story if we hear back from either.


Jon Campbell is a staff writer for the

Voice

, covering criminal justice,

legal issues

, and the occasional

mutant park squirrel

. Tip him at

jcampbell@villagevoice.com

and follow him on Twitter at

@j0ncampbell

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