Contraband Cigarettes, Alcohol Costing Maryland Millions

ANNAPOLIS, Md. (WJZ) — Maryland’s comptroller steps up enforcement of tax laws, announcing that cigarette, alcohol and fuel violations are on the rise. 

Political reporter Pat Warren reports on the impact on the state economy.

Contraband cigarettes and black market beer, wine and liquor are costing the state millions.

“Yeah, we confiscated 180,000 packs of cigarettes like this.  It is more appealing to criminals to smuggle cigarettes than it is to smuggle heroin,” said State Comptroller Peter Franchot.

Enforcement agents issued 110 cigarette violations in the 2011 fiscal year, which ends Thursday.  They confiscated more than 181,000 packs of cigarettes valued at a million dollars, more than twice the number seized last year.

“They can buy this with no tax or very small tax in southern states.  They bring it to Maryland where we have a significant cigarette tax or they take it to New York where they have a really high cigarette tax and they make a ton of money,” he said.

With its two dollar tax on a pack of cigarettes, that ought to be Maryland’s ton of money.

“Two days ago, the state police pulled a guy over on 301 in southern Maryland for a traffic violation and said, `Hey, what are all those cigarettes in your car?’  The guy had 7,000 packs of cigarettes that he was smuggling into the state.  Well, he’s in jail, the car is confiscated, the cigarettes are here,” Franchot said.

The state loses money on black market alcohol, as well.  In 12 months, agents confiscated 320 gallons of liquor and nearly 4,000 containers of beer valued at almost $50,000.

“The real money is in the cigarette smuggling and we are rising to the occasion,” Franchot said.

Enforcement agents expect the new Maryland alcohol tax increase that takes effect Friday to stimulate more illegal activity.  The comptroller says his office is ready for it.

The comptroller’s office keeps the contraband until the cases are heard.  If the defendant is found guilty, it’s either sold to retailers or destroyed.

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