Stop Tobacco Smuggling in the Territories Act of 2013

Floor Speech

By:  Bob Goodlatte
Date: March 5, 2013
Location: Washington, DC

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Mr. GOODLATTE. Mr. Speaker, I yield myself such time as I may consume.

Cigarette trafficking is a very lucrative crime both here in the United States and abroad. It is estimated that illicit cigarettes account for over 10 percent of the more than 5.7 trillion cigarettes sold globally each year. Here in the United States alone, approximately 4 billion of the cigarettes sold each year are illicit.

Cigarette smuggling is generally carried out by large criminal organizations that take advantage of the significant disparity between the taxes levied on cigarettes across the States. These differences create a highly lucrative market for individuals to evade State and local sales taxes by purchasing cigarettes in one locality and transporting them to another for resale below market value. It is estimated that criminals can make a profit of as much as $1 million on just a single truckload of illicit cigarettes.

Cigarette smuggling is not just profitable for criminal networks; this crime also harms State and Federal revenues. According to the Justice Department, this illicit activity costs the States and the Federal Government an estimated $5 billion each year. This is money that could and should be put to better use.

In 2009, Congress took steps to curb contraband cigarettes with the Prevent All Cigarette Trafficking, or PACT, Act. The PACT Act prohibits the sale of cigarettes and other tobacco products over the Internet and made changes to the criminal anticigarette smuggling statutes.

H.R. 338, the Stop Tobacco Smuggling in the Territories Act of 2013, provides a technical correction to ensure that the criminal prohibitions against cigarette smuggling apply to the U.S. territories of American Samoa, Guam, and the Northern Mariana Islands just as they do in the rest of the country. Without this fix, cigarettes sold in these territories without evidence that taxes were paid do not fall within the definition of ``contraband cigarettes.'' This is a modest but important change that will help to discourage crime and increase tax revenues in these United States territories.

I want to thank Mr. Faleomavaega for his work on this issue, as well as the ranking member on the full committee and the subcommittee for their support of this effort, and the chairman of the Crime Subcommittee, Mr. Sensenbrenner, as well, and I urge my colleagues to join me in support of this bill.

I reserve the balance of my time.

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Mr. GOODLATTE. I will close simply by saying cigarette smuggling is a serious problem and revenues lost to the territories that Mr. Faleomavaega and others represent are lost revenues that they can use to meet legitimate obligations, and we want to help them combat that. So I strongly support the legislation and urge my colleagues to do the same, and I yield back the balance of my time.

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