CONGRESSWOMAN ELISE STEFANIK
On Tuesday, March 5, 2013, the House is scheduled to consider H.R. 338, the Stop Tobacco Smuggling in the Territories Act of 2013, under a suspension of the rules. The bill was introduced on January 22, 2013 by Del. Eni Faleomavaega (D-AS) and referred to the Committee on the Judiciary.
H.R. 338 adds American Samoa, the Commonwealth of the Northern Mariana Islands, and Guam to the definition of “state” in the criminal tobacco smuggling statutes (18 USC 2341(4)).
Under current law, anyone who ships or sells large amounts of tobacco products across state lines must keep detailed records and submit reports to the Attorney General of the United States, as well as the Attorneys General and tax administrators of the States where the shipments originated and ended. American Samoa, Guam, and the Northern Marianas Islands are not covered under the definition of State, most likely because the underlying statute was enacted before these territories had representation in Congress. H.R. 338 would expand that definition to ensure that all US territories would be covered.
Cigarette smuggling is typically carried out by sophisticated, large-scale criminal organizations that take advantage of the significant disparity between the taxes levied on cigarettes across the states. These differences create a highly lucrative market for individuals to evade the local sales tax and purchase cigarettes in one locality and transport them to another for resale below market value. Criminal organizations are able to make a profit of as much as one million dollars on just a single truckload of illicit cigarettes.
Cigarette trafficking is one of the most lucrative smuggling operations in the United States and around the world. It is estimated that illicit cigarettes account for over 10 percent of the more than 5.7 trillion cigarettes sold globally each year and, in the United States, approximately four billion cigarettes sold each year are illicit. According to the Justice Department, this illicit activity costs the states and the federal government approximately $5 billion each year.
A similar bill, H.R. 5934, passed the House in the 112th Congress by voice vote.
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