Mexican cartels now trafficking ... cigarettes?

Those Mexican crime syndicates certainly find their way into the news a lot, don’t they? When they’re not running guns from American government sources, kidnapping children for prostitution or shipping tons of cocaine and marijuana through tunnels they’re busy corrupting the government. But it seems that now they’ve found yet another avenue of profit, and just like in many states in the USA it popped up after the government decided to jack up the tax rate on smokes.

A Mexican industrial group said Tuesday an increase in tax on cigarettes that went into effect in 2011 has led to a proliferation of contraband, and that illegal cigarettes now account for nearly 17% of the cigarettes sold in the country.

The Confederation of Industrial Chambers, or Concamin, said tobacco consumption hasn’t declined in the year-and-a-half since the higher tobacco tax took effect, although the sale of illegal cigarettes has reached record levels.

Congress approved the higher tax on cigarettes in late 2010 despite protests from the country’s cigarette manufacturers

The new tax has a pack of smokes in Mexico going for an average of 35.5 pesos (currently $2.69 US) as compared to 20.5 pesos ($1.69) on the black market. And as more and more buyers flee to the cartels for their fix, the result is pretty much the same as we’ve seen in Illinois and New York – among other states. The anticipated tax boom fails to materialize in the government’s coffers and instead winds up financing criminal endeavors.

But this may not be bad news for everybody. As we’ve discussed before, there are a couple of international agencies who are very interested in seeing cigarette taxes go up around the world, primarily so they can get a cut of the action. They are the United Nations and the World Health Organization. They’ve made some progress already in the Philippines and would like to expand well beyond that. But as this study from Freedom and Prosperity shows, this would probably be a great idea for the W.H.O but a big loser for everyone else.

Since the bureaucrats running international organizations are not elected, such indirect control is the only way for national governments – on behalf of their taxpayers – to oversee the responsible use of funds.

This is why it would be imprudent to give international bureaucracies an independent source of revenue. Not only would this augment the already considerable risk of imprudent budgetary practices, it would exacerbate the pro-statism bias in these organizations.

Moreover, the first incidence of direct taxation to fund an international organization would unleash a tidal wave of similar direct-funding proposals. The camel’s nose would soon become an entire animal, then followed by a herd.

It’s a disturbing trend. But the good news is that it can’t be put into place here in the United States without the complicit help of the Congress. And they’d never go for that… right?