Another Tobacco Store Burglary Today

Unintended consequence of high cigarette taxes

By Michael D. LaFaive | January 21, 2015

News reports today tell of a Macomb County tobacco store burglary by four men who stole cigarettes and escaped capture after a police chase. This unlawful behavior is a direct and unintended consequence of the high excise taxes imposed on Michigan cigarettes ($2 per pack) statewide.

There are other unintended consequences too. Mackinac Center analysts estimate that 25 percent of all the cigarettes consumed in the Great Lake State in 2013 were smuggled in from other states. Revenue losses to the treasury from smuggling total $298 million.

High tobacco taxes lead to violence against police, property and people in addition to smuggling.

In late 2013, police officers in Warren had to shoot smoke shop thieves as they attempted to make their getaway with $10,000 worth of tobacco merchandise. “It happens all the time” one police officer said. She said tobacco stores are “targeted.” Wholesalers are sometimes targeted too.

The reason they are targeted is that thieves know cigarettes have value in part due to the high excise taxes imposed on them. Once stolen, they are easily passed off as legitimate smokes elsewhere and sold to other (illicit) distributors or directly to smokers.

There are several ways to address the problems associated with illegal trafficking: cut excise taxes, increase law enforcement efforts or some combination of both.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.

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MEDC's New Program: Government Funding Government

City of Ypsilanti will benefit from MEDC's $50,000

By Tom Gantert | January 21, 2015

In promoting a new variation on its expansive mission, a recent Michigan Economic Development Corporation press release referenced a "surge in new businesses, restaurants and shops."

However, none of those enterprises will receive any of the $50,000 MEDC is kicking in to a “crowdfunding” project sponsored by the Michigan Municipal League, a lobbying and information resource organization funded by local governments. Instead, a total of $100,000 will be turned over to the City of Ypsilanti to convert a city-owned farmers market called the Freighthouse into a “community center.”

Essentially, a state “economic development” agency is helping a government-funded lobbyist organization fund an amenity owned by a local unit of government.

“It’s something governments feel they have to do,” said Leon Drolet, chair of the Michigan Taxpayers Alliance. “The money has already been taken from people. It could have been used productively. Instead it exists in a wasteland of bad policy. It was taken out of productive use and put into government use. You get these bizarre results. Nobody cares anymore.”

In response to questions MEDC Spokesman Mike Shore referred to an agency press release.

"Projects like these can greatly help turn a good community into a great community,” said Michigan Municipal League CEO and Executive Director Dan Gilmartin, in a press release. “The League strongly advocates the importance of creating communities and places where people want to live, work and play. The effort at the Freighthouse contributes to that placemaking goal in an up-and-coming area of Ypsilanti.”