Drug Tax: Up in Smoke?

TALK ABOUT THE LAW OF UN-intended consequences. When Texas instituted a tax on the sale of illegal drugs in 1989,themove was supposed to give prosecutors additional artillery, if authorities couldn’t bust drug dealers for actually peddling their dope, they could at least nail them for tax evasion. After all, how many drug dealers would pay for a stamp meant to be affixed to their illicit wares? (A stamp for an ounce of marijuana costs $101.50 -slightly more than the current street value, sources say, for an ounce of pot. )

Well, at least a few dealers did pay the tax, and now some are beating the system. In recent months, courts in Texas and other states have ruled that prosecuting dope dealers for the sale of drugs on which they have already paid a punitive tax constitutes double jeopardy, a violation of constitutional rights. According to the Dallas County District Attorney’s office, at least two cases against tax-paying drug dealers in Dallas are in danger of being thrown out on this technicality.

Even before this legal loophole opened up, the success of the drug tax has been uncertain. Of the 594 cases filed last year in Dallas County against dealers for neglecting their tax duty, only a handful have resulted in felony indictments for tax evasion. The rest have been turned back over to state tax collectors, who have collected far less than one percent of the expected $9.3 billion in assessed taxes, penalties, and interest. Though 3,240 tax stamps have been purchased in Texas, Clyde Walter of the state comptroller’s office believes most of the buyers are stamp collectors. And if current court rulings stand, it looks like the lawmakers have been licked.