Drug Tax Lacks Revenue From Poor Enforcement

Posted on Apr 26, 2010 in Legislation, Local Issues

In 1990, the Louisiana legislature instituted a tax whereby drug dealers would be required to buy tax stamps and attach them to bags of drugs or face stern penalties if they were caught without them. Louisiana’s Marijuana and Dangerous Controlled Substances Tax has suffered though from a lack of enforcement and, thus, a lack of results. The idea behind this law was to allow the state to tax gains from illicit activity while avoiding drug dealers’ right to self-incrimination. Additionally, the taxes were supposed to be so overburdening that it would also make drug dealing significantly less profitable.

From 2006-2010, Louisiana has only sold 292 stamps, while assessing $48 million in fines and collecting $126,000. Furthermore, many of the stamps purchased are believed to be by collectors and not for their intended purpose.

Many states such as Alabama, Connecticut, Georgia, Indiana, Iowa, Kentucky, Massachusetts, Minnesota, Nebraska, Nevada, North Carolina, Oklahoma, Rhode Island, South Carolina, Tennessee, Texas and Utah all have had similar tax programs with some being struck down as unconstitutional by their respective Supreme Courts. However, for some of these states, tax revenue is generated in the millions from such programs.

In Louisiana, drug dealers are supposed to pay $3.50 per gram of marijuana and $200 per gram of a dangerous controlled substance such as cocaine or heroin. The penalty carried for not having a stamp is a fine of up to $10,000 or up to 5 years in prison. Additionally, a monetary penalty can be assessed on the tax that was not paid. Louisiana Revenue Secretary Cynthia Bridges argues that too often these fines are settled for pennies on the dollar and urges that something be done especially in the tough financial times in which the state currently finds itself.

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