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MR. JARRETT: A new warning about the dangers of cigarettes. It's not just that they are bad for your health when you smoke them; they also may be funding some of the organizations that want to kill Americans. Al Qaeda, Hezbollah and Hamas all appear to be getting cash from illegal cigarette sales. A lot of the tobacco sold right in the U.S. tax-free on American Indian reservations. Congress says the problem has gone unnoticed for too long.
Representative Peter King, a ranking member on the House Homeland Security Committee, called for that investigation. Congressman King, what did you find?
REP. KING: We had -- the Republican staff on the Homeland Security Committee did a full investigation, and finding out that up to millions of dollars are being taken from the sales of these illegal, smuggled cigarettes, and are being sent overseas to Hamas and Hezbollah. This is a special problem in New York, where have large Indian reservations and we have actually tractor-trailers going up and buying 1,500 cartons at a time of these cigarettes tax-free -- which is illegal -- and then they're brought downstate and they're sold, and the profits are being sent in some cases overseas to Hamas and Hezbollah. And New York State made a decision 10 years ago not to enforce the tax laws because they're afraid of violence. Well, as a result of that, not only will the state lose close to $800 million in revenue, but in the long term a greater danger is the fact that some of this money is going to be used to fund our enemies.
MR. JARRETT: Well, in a state like New York, where cigarette taxes are well over a dollar a pack, you fill a tractor-trailer full of cigarettes that you buy tax-free, you sell them later at a profit that can be significant. That's what's going on here.
REP. KING: Oh, it really is. And the taxes are going up, I think, another $1.50 or $2 just next month. A pack of cigarettes is going to cost almost $9 in New York. You can get that for ($)3 or $4 at an Indian reservation. So the profit margin is just, again, phenomenal.
And we're talking about large tractor-trailer loads of these cigarettes being brought downstate, being sold, being disseminated. And you know, the average person gets in and thinks they're getting a break on a pack of cigarettes, not realizing that the money from those cigarettes -- you know there's no such thing as a free lunch? Well, there's no such thing as a free cigarette. The money from that cigarette is being used to, in some cases, to fund terrorists overseas who are sworn enemies of the United States and our closest allies, such as Israel.
MR. JARRETT: Well, this argument over the Indian reservations being allowed to sell cigarettes tax-free, that's gone to the Supreme Court, right?
REP. KING: Yeah, and the Supreme Court has said that while Indians can sell cigarettes tax-free to other Indians living on the reservation, they cannot sell them to people who are not residents. And almost -- the great, great majority of the cigarettes in New York at these reservations are sold to non-residents. They're sold to people who are either trying to save money or are trying to sell them at a tremendous profit. And again, the profit's being used to fund terrorism. No, this is -- the Supreme Court has specifically said that states like New York can go in and enforce the tax laws, and they certainly should.
And I think in this case, not only should New York do it; I think because of the homeland security threat the federal government should also be involved so we have the federal and state officials working together. Now, I know Governor Paterson in New York, he's new in the office, he's a wonderful person. He is reexamining this issue, and I would certainly urge David Paterson to do all that he can to enforce these tax laws. Again, we have a big budget crunch in New York. That's $800 million, plus the money's going to terrorism.
MR. JARRETT: Yeah, estimated loss more than a half a billion dollars a year in tax revenue.
Congressman Peter King from the Homeland Security Committee, thank you.
REP. KING: Thank you.