Monday, December 31, 2007

First it was pop cans 

You remember perhaps from a few months ago a pop-can smuggling scam? Yes, it's just like that old Seinfeld episode with Kramer and Newman taking the U-Haul to Michigan, and when it happened in real life I had a chuckle about it reading the story probably on Fark.

But understand the mechanism: The government creates a rule that requires us to pay deposits on cans. The cans have a legal price well above their price in the market without this price control. Some governments place a higher legal price than others. Ergo, those who get pop cans in the low-legal-price states have some incentive to move those cans to the high-legal-price states. It's an artificial incentive, one created by government, which government then has to prevent by creating the pop-can police.

It's happening again with cigarettes in Maryland. There, the cigarette tax is doubling:
So, two cartons, with 20 packs and 400 cigarettes, would sell for $127 in Maryland but only $77 in Virginia. Our previous report on illegal cigarette smuggling showed it was on the rise because of high cigarette taxes, and in this case, such an illegal transaction could net the smuggler a lucrative $50, or 65 percent profit. Plus there's online smuggling too.
It doesn't take a U-Haul trailer to get a carton of cigarettes across the border.

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