“A Tax Hike for Terror”

June 6, 2008 — It was billed as a day of celebration: New York’s $1.25-a-pack cigarette tax hike went into effect on Tuesday, rendering state and city Health Commissioners Richard Daines and Thomas Frieden giddy with anticipation.

State cigarette sales will plummet by 160 million packs a year, they said, and tens of thousands of New York kids won’t die prematurely from smoking. Plus, state tax revenue will bulge by a cool $265 million this year.

What’s wrong with that?

Well, a rather more jarring perspective comes courtesy of the Richmond, Va., US attorney’s office – which this week announced trafficking and money-laundering charges against some of New York’s biggest cigarette smugglers.

The indictments – 27 in total – reveal the extent of the underworld nourished by Daines, Frieden & Co.’s naivete.

As part of a 17-month sting operation orchestrated by the state Department of Taxation & Finance, the alleged butt-runners bought more than 260,000 cartons of tax-free smokes in Virginia.

Most were then sold to city retailers, with the smugglers and retailers splitting the $3-a-pack in state and city taxes then levied on cigarettes.

(Even that volume doesn’t tell the full story. Thanks to Albany’s stubborn refusal to enforce its taxes on Indian reservations, city smugglers have a prime source of product much closer to home: More than 30 million cartons of cigarettes came off the state’s reservations last year alone.)

Still more disturbing, however, is where all the money could be going. Officials have long known that domestic buttlegging is an attractive source of funding for al Qaeda, Hezbollah and other terrorist outfits – probably to the tune of millions of dollars a year.

And as The Post’s Dan Mangan reported, authorities are investigating possible terror ties of those indicted in the sting, who they say sent all of their profits to the Middle East.

One thing’s for sure: With taxes up another $1.25 statewide, smugglers’ profit margins sure aren’t going down.

Not that you’ll hear the anti-tobacco crowd talk about that.

May 11, 2008 — Federal prosecutors on Long Island notched a small victory over New York’s booming illicit cigarette trade earlier this month, winning the conviction of black-market kingpin Rodney Morrison on racketeering conspiracy and weapons charges.

Morrison, who’s looking at up to 30 years in prison, turned an estimated profit of $35 million per month running the Peace Pipe Smoke Shop on the Poospatuck Indian Reservation.

Yet, astounding as that number is, it barely scratches the surface of a trade that’s long been one of New York’s biggest – and most deadly – public-policy embarrassments