NEW TAX ON ILLEGAL DRUGS NETS $600,000 IN FIRST 6 MONTHS
State: Collections Far Exceed Those Of N.C.
NASHVILLE (AP) - Tennessee's unauthorized substances tax, modeled after a 13-year-old North Carolina tax aimed at fighting illegal drugs, has generated more than $600,000 in collections and $15 million in assessments since it took effect Jan. 1.
"Based on what North Carolina did, we've collected six times more than they did in their first six months," Tennessee Department of Revenue spokeswoman Emily Richard said.
With the new tax, people in possession of illegal drugs must purchase stamps marked with a number to be affixed to packages containing the drugs.
When drugs without the stamp are found, the Tennessee Department of Revenue taxes the alleged drug possessor and gives them an opportunity to pay the tax. If it is not paid, agents may seize and auction off anything of value the person owns.
So far, only 184 stamps have been purchased voluntarily, Richard said.
The illegal drug tax, levied per gram, is $3.50 for marijuana, $50 for cocaine, and $200 for meth and crack cocaine. Three-fourths of the tax revenue is given to the law enforcement agency that investigates the drug offense, and the rest goes into the state's general fund.
State Sen. Randy McNally, R-Oak Ridge, proposed the tax last year and said the amount of money collected so far shows the tax has been successful.
"The bill was an effort to make criminals pay for their interdiction and their jail time rather than the taxpayers," he said.
No criminal conviction is needed for the state to enforce the tax, and information obtained from the sale of the drug stamps cannot be used in criminal prosecutions, according to the Revenue Department. At the same time, buying drug stamps does not provide immunity from criminal prosecution.
Memphis defense attorney Leslie I. Ballin has 12 clients who have challenged unauthorized substance taxes assessed against them and have been granted hearings on the matter. He said he thinks it's simply unfair to levy a tax before a person has been convicted of a crime.
"They can take property without due process," Ballin said in a telephone interview. "You've requested a hearing, you've been granted a hearing, the hearing is pending, yet the taxman is knocking at your door and can take your chickens or your horses."
McNally said because the tax is an administrative procedure, only a preponderance of evidence is needed to assess it.
"Due to a technicality, someone may get off on drug charges, but this would still have them pay for the interdiction."
Nashville lawyer David Raybin said he did not have a problem with the tax itself, but like Ballin, he does not agree with the method of collecting the revenue or seizing property before a person has been granted due process of law.
"I imagine there will be a lot of court action in the future regarding the tax," he said.