State Steps Up Battle Against Illegal Cigarettes $100 Million A Year Lost Due To Sale Of Unlicensed Smokes
State officials are escalating their long-running war against unlicensed cigarettes sold on Indian reservations, a spokesman for the state Department of Revenue said Friday.
Washington has the highest state cigarette tax in the nation, and the state estimates it loses $100 million a year because of unlicensed cigarettes.
Agents on Thursday seized more than 26,000 cartons of cigarettes believed headed to a Washington Indian reservation. It was believed to be the largest seizure of unstamped cigarettes in state history, Revenue spokesman Mike Gowrylow said.
The failure of two bills in recent Legislatures that tried to strike a deal on the sale of unlicensed cigarettes has prompted the agency to make three major cigarette busts since September, Gowrylow said.
“We backed off trying to interdict shipments while we were trying to get legislation through,” Gowrylow said. “Now that that is not likely, we are ratcheting up our enforcement efforts.”
In September, state officials busted a 10,000-carton shipment of unlicensed cigarettes south of Tacoma, he said. In November, a 6,000-carton shipment of Chinese cigarettes was busted near Mount Vernon, he said.
The state has been fighting unlicensed cigarettes for 25 years.
Washington’s 82-1/2 cents per pack tax on cigarettes brings in $300 million a year. By comparison, Oregon has a tax of 68 cents and Idaho a tax of 28 cents.
State taxes are in addition to the 24-cent federal tax.
Under treaties with the federal government, cigarettes can be sold on Indian reservations to tribal members without paying the state tax.
As a result, cigarette stores have sprung up on reservations around the state. While it is illegal for non-Indians to buy unlicensed cigarettes, the practice is common, Gowrylow said.
A 1995 state study estimated that one out of four cigarettes consumed in the state is contraband, with 60 percent sold in Indian smokeshops. The rest are from cross-state border and military sales.
State officials are prohibited from giving many details about the latest bust, because it will likely be appealed, Gowrylow said.
Agents found 26,381 cartons of cigarettes Thursday in a tractor-trailer rig when it stopped at a Washington State Patrol weigh station at Plymouth, south of the Tri-Cities.
The 5.2 million cigarettes have an estimated retail value of $520,000 and represent a potential tax loss to the state of nearly $260,000, Gowrylow said.
The cigarettes were taken to a warehouse in Pasco and eventually will be auctioned off to retailers, Gowrylow said, assuming the state wins any appeals.
The Tri-City Herald newspaper reported Friday that the cigarettes were destined for the Yakama Indian Nation.
There are two smoke shops on the reservation, which are owned by individuals, Ross Sockzehigh, chairman of the tribal council, told the newspaper.
He declined further comment and tribal officials did not return a phone call from The Associated Press on Friday.
The newspaper identified the truck driver as Loyd Williams of Sapula, Okla.
“Scared the hell out of me,” Williams told the newspaper.
“I didn’t know the (tax) stamp had to be on before I brought them into the state. No one told me.”
Williams said he hauls a 48-foot truck trailer full of smokes from a Kansas tobacco warehouse to the Yakama reservation once a month.
Gowrylow said the department typically does not prosecute the truck drivers, although that policy might change.
Tribes are allowed to sell a certain number of cigarettes to tribal members tax-free, but the number is based on average consumption multiplied by the number of tribal members.
Importing and selling more cigarettes than allowed is a violation of state law, Gowrylow said.
Far more cigarettes are sold on reservations than is legally allowed, Gowrylow said.
The bills that failed in the Legislature would have allowed the tribes to impose their own cigarette taxes and share the proceeds with the state, Gowrylow said.
Non-Indians found in possession of untaxed cigarettes may be fined $10 per pack or $250, whichever is greater.