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NASHVILLE- Moonshiners, crack dealers, marijuana growers and methamphetamine cooks must pay Tennessee taxes on their illicit goods under a new state law that took effect Saturday.
The so-called "crack tax" is one of more than a dozen new Tennessee laws, including reformers of workers' compensation. The laws passed the General Assembly last spring and went on the books at the stroke of midnight 2005.
Although taxing illegal drugs is a novel approach, the law's sponsor, Sen. Randy McNally, R-Oak Ridge, insists the new tax is not a novelty.
"It's my hope that we could use any money this raises to help offset the tremendous costs illegal drugs are having on our state," Sen. McNally said. "The prosecution, the interdiction, the prison costs are really straining a lot of budgets, and we could use any additional money we can find to help fight the drug problem."
Under the new law, makers of illegal substances are required to purchase credit card-sized tax stamps from the Tennessee Depatment of Revenue. If they're caught in possession of illegal substances, in addition to facing criminal charges, they'll face civil action for tax avoidance if they can't show their tax stamps. If they're delinquent, the state will confiscate cash and property to cover the outstanding tax debt.
The amount of the tax depends on the illegal substance. A gram of cocaine will be taxed at $50, while a "dose" of methamphetamine will be taxed $50 to $200, depending on how much is confiscated. A gallon of moonshine will be taxed at $31.70.
The new law is modeled on a 1990 North CArolina law. Revenue officials in the Tarheel State said they've collected more than $80 million in seized assets from about 68,000 people since the law's enactment. Fewer than 80 people --most believed to be stamp collectors -- have purchased stamps.
On average, North Carolina gives $700,000 to $900,000 a month to police agencies, officials there have said.
Tennessee will return 75 percent of the value of the seized and auction assets to local law enforcement agencies where the assets were seized. State officials will put the remaining 25 percent in the state general fund, according to the law.
Sam Chessor, assistant commissioner of the Tennessee Department of Revenue, said the law's enforcement will cost about $800,000 a year but will generate millions of dollars in revenue.
"There is no doubt that the cost-benefit will be tremendous," he said. "When you are talking about $800,000 in operating costs and bringing in several million dollars, that is a pretty good return on the investment."
by John Commins, Chattanooga Times Free Press
The so-called "crack tax" is one of more than a dozen new Tennessee laws, including reformers of workers' compensation. The laws passed the General Assembly last spring and went on the books at the stroke of midnight 2005.
Although taxing illegal drugs is a novel approach, the law's sponsor, Sen. Randy McNally, R-Oak Ridge, insists the new tax is not a novelty.
"It's my hope that we could use any money this raises to help offset the tremendous costs illegal drugs are having on our state," Sen. McNally said. "The prosecution, the interdiction, the prison costs are really straining a lot of budgets, and we could use any additional money we can find to help fight the drug problem."
Under the new law, makers of illegal substances are required to purchase credit card-sized tax stamps from the Tennessee Depatment of Revenue. If they're caught in possession of illegal substances, in addition to facing criminal charges, they'll face civil action for tax avoidance if they can't show their tax stamps. If they're delinquent, the state will confiscate cash and property to cover the outstanding tax debt.
The amount of the tax depends on the illegal substance. A gram of cocaine will be taxed at $50, while a "dose" of methamphetamine will be taxed $50 to $200, depending on how much is confiscated. A gallon of moonshine will be taxed at $31.70.
The new law is modeled on a 1990 North CArolina law. Revenue officials in the Tarheel State said they've collected more than $80 million in seized assets from about 68,000 people since the law's enactment. Fewer than 80 people --most believed to be stamp collectors -- have purchased stamps.
On average, North Carolina gives $700,000 to $900,000 a month to police agencies, officials there have said.
Tennessee will return 75 percent of the value of the seized and auction assets to local law enforcement agencies where the assets were seized. State officials will put the remaining 25 percent in the state general fund, according to the law.
Sam Chessor, assistant commissioner of the Tennessee Department of Revenue, said the law's enforcement will cost about $800,000 a year but will generate millions of dollars in revenue.
"There is no doubt that the cost-benefit will be tremendous," he said. "When you are talking about $800,000 in operating costs and bringing in several million dollars, that is a pretty good return on the investment."
by John Commins, Chattanooga Times Free Press
