[Congressional Record Volume 154, Number 143 (Wednesday, September 10, 2008)]
[Extensions of Remarks]
[Page E1752]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             PREVENT ALL CIGARETTE TRAFFICKING ACT OF 2008

                                 ______
                                 

                               speech of

                           HON. PETER T. KING

                              of new york

                    in the house of representatives

                       Tuesday, September 9, 2008

  Mr. KING of New York. Mr. Speaker, I rise today in support of the 
Prevent All Cigarette Trafficking Act of 2007, referred to as the 
``PACT Act,'' introduced by my colleague from New York, Mr. Weiner.
  As we approach the seventh anniversary of the terrorist attacks of 
September 11, 2001, the threat from radical Islamic terrorist groups 
remains very real. Supporters of Hamas, Hezbollah, and al Qaeda are 
constantly adapting and seeking new means to further and finance their 
cause.
  As law enforcement officials make it more difficult to raise and move 
money through ``traditional'' terror financing avenues, criminal 
enterprise is increasingly the life-blood of terrorist groups. 
Smuggling illicit cigarettes is a perfect example. This illicit 
activity is more than just a matter of health concern and hundreds of 
millions of dollars in lost tax revenue--it is a matter of national 
security.
  An April 2008 Committee on Homeland Security Republican staff report 
based on numerous interviews with Federal, State, and local law 
enforcement officials, estimated that millions of dollars in profits 
generated by tight-knit, Arab-based illicit cigarette smuggling 
operations are being remitted to the Middle East, where these funds 
directly or indirectly finance groups such as Hezbollah, Hamas, and al 
Qaeda. The report outlined how these criminal and terrorist 
organizations purchase tax free cigarettes on Indian reservations or in 
lower tobacco tax States, transport them to New York City, affix 
counterfeit tax stamps, and sell them for full retail price. A well-
organized network could generate up to $50,000 on an average load of 
1,500 cartons of contraband cigarettes.
  The report further found that New York State's policy of forbearance, 
despite a U.S. Supreme Court ruling that upheld States' rights to tax 
all cigarettes sold on Indian reservations to nonmembers of the tribe, 
has resulted in an environment where cigarette smuggling rings operate 
with virtual impunity.
  The PACT Act aims to attack part of the problem in States such as New 
York. It strengthens current Federal contraband cigarette laws through 
increased transparency in recordkeeping, enhanced existing penalties, 
and increased compliance standards for Internet sellers. In addition, 
it provides law enforcement more resources to help close critical gaps 
in enforcement that will make it more difficult for criminal and 
terrorist organizations to exploit disparities in tobacco tax rates 
among States.
  Another way to restrict terrorist organizations from obtaining 
revenue by exploiting low-cost cigarettes is for States like New York 
to abandon their policies of forbearance and take action to fully 
enforce their tax laws. By refusing to collect taxes on cigarettes sold 
to nonresidents of Indian reservations, the State of New York is 
fueling a boom in illicit cigarette smuggling and inflating the profit 
margins of criminal and terrorist smuggling networks. Enforcing the tax 
laws will generate up to $800 million in lost tax revenue while cutting 
off a revenue stream to those who wish to do harm to our Nation.
  Mr. Speaker, while H.R. 4081 is a good first step, I look forward to 
working with my colleagues to strengthen this bill as it moves through 
the legislative process to help keep terrorists from exploiting this 
revenue source.
  I urge my colleagues to support passage of this bill.

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