For Immediate Release
(202) 224-5653

KOHL SPONSORS BILL TO PREVENT BLACK MARKET CIGARETTE SMUGGLING

  

              Tobacco Trafficking Funnels Money to Terrorists,

Short-Changes State Tax Coffers

 

WASHINGTON B U.S. Senator Herb Kohl today reintroduced the Prevent All Cigarette Trafficking (PACT) Act of 2009 to provide law enforcement with the tools they need to crack down on black market tobacco selling.  Cigarette trafficking has developed into a popular, and highly profitable, means of generating revenue for criminal and terrorist organizations.  Hezbollah, al Qaeda and Hamas have all generated significant revenue from the sale of counterfeit cigarettes.  That money is often raised in the United States, and it is then funneled back to these international terrorist groups.  Cigarette smuggling is a multibillion dollar a year phenomenon and it is getting worse.  In 1998, the Bureau of Alcohol, Tobacco, Firearms and Explosives (BATFE) had six active tobacco smuggling investigations.  In 2005, that number swelled to 452.  Today there are more than 400 open cases.  Cigarette trafficking, including the illegal sale of tobacco products over the internet, costs states billions of dollars in lost tax revenue each year.  It is estimated that states lose $5 billion in revenues due to illegal tobacco sales.

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“Each day we delay passage of this important legislation, terrorists and criminals raise more money, states lose significant amounts of tax revenue, and kids have easy access to tobacco products over the internet,” Kohl said. “Cutting off financial support to terrorist groups is an integral part of the protecting this country against future attacks.  We can no longer continue to let terrorist organizations exploit weaknesses in our tobacco laws to generate significant amounts of money.  The cost of doing nothing is too great.”

 

The Internet represents a new obstacle to enforcement.  Illegal tobacco vendors around the world evade detection by conducting transactions over the Internet, and then shipping their illegal products around the country to consumers.  Just a few years ago, there were less than 100 vendors selling cigarettes online.  Today, approximately 500 vendors sell illegal tobacco products over the Internet. 

 

Kohl said that, “According to the Government Accountability Office, each year, cigarette trafficking investigations are growing more and more complex, and take longer to resolve.  More people are selling cigarettes illegally, and they are getting better at it.  As these cases get tougher to solve, we owe it to law enforcement officials to do our part to lend a helping hand.”

 

 

The Prevent All Cigarette Trafficking (PACT) Act will:

 

·        Strengthen the reporting requirements for interstate cigarette sellers.

 

·        Increase the criminal penalty from a misdemeanor to a felony and create a substantial civil penalty for violations, including violations of the reporting requirements and state tobacco tax laws.

 

·        Grant federal and state law enforcement officials more powers to investigate and         prosecute violators.

 

·        Prohibit the United States Postal Service from delivering tobacco products

 

 

Today the House of Representatives passed companion legislation by an overwhelming majority, 397 to 11, and the Senate Judiciary Committee unanimously approved Kohl’s PACT Act in May, 2007.  But previous efforts to pass the bill in the full Senate have been blocked by a small number of Republican Senators on behalf of special interests, such as tobacco companies and large delivery services.  Kohl has worked closely with the common carriers, including UPS, to ensure that the PACT Act does not place any unreasonable burdens on those businesses.