STATE DRUG TAX RULED UNCONSTITUTIONAL

A federal appeals court has ruled North Carolina's drug tax
unconstitutional, prompting state Attorney General Mike Easley to fight for
what many consider one of the state's most popular and successful levies.

The tax, originally sponsored by Republican state Sen. Bob Shaw of
Greensboro, collects about $4 million a year from individuals charged with
possessing illegal drugs. It has raised more than $26 million since its
inception eight years ago.

The ruling from the 4th U.S. Circuit Court of Appeals earlier this week
threatens not just an end to that revenue but also the end to an effective
weapon in the state's battle against drug dealers.

State officials say the tax is a fair and legitimate form of revenue, much
like taxes on alcohol and cigarettes. But the court, deciding a case that
originated in Reidsville, ruled the tax is "in reality a criminal penalty"
that subjects people to being punished twice for one crime.

That, the court said, violates the Fifth Amendment's ban on double
jeopardy, the act of facing punishment for the same crime more than once.

"North Carolina cannot treat the imposition of its drug tax as if it is a
civil sanction," wrote U.S. Circuit Judge M. Blane Michael. "It is a
criminal penalty."

The decision is exactly opposite to a ruling earlier this year by the N.C.
Supreme Court. In a different case, the state court found the drug levy was
a tax, not a penalty.

Easley said Friday he either will appeal the federal ruling to the U.S.
Supreme Court or request another hearing before the appeals court.

"We're very surprised the 4th Circuit would get into this issue to begin
with since it's a state tax issue," Easley said. "This is extremely
important to law enforcement and we're going to pursue the matter."

The court's ruling stems from a 1993 case in which state and federal agents
arrested David Lynn Jr. of Reidsville and seized 970 grams of cocaine,
worth about $25,000 on the street.

The state Department of Revenue sent Lynn a tax bill for $389,125 --
$194,000 in taxes, $194,000 for not paying the tax on time and $1,125 in
interest. Cars, televisions, VCRs, video games, furniture and a grandfather
clock eventually were seized to pay the bill.

Terry Harn, a Chapel Hill attorney who represented Lynn, said the drug tax
was meant to be punishment, not an objective levy.

"You can't punish people over and over again," Harn said Friday. "You get
one bite at them -- one prosecution -- and that's it."

Calls to Lynn's home seeking comment Friday went unanswered.

Local police bemoaned what could be a costly loss to their departments.

For example, the Guilford County Sheriff's Department now has about
$220,000 in drug tax money set aside, said Sheriff BJ Barnes. That money
offsets the costs of new vehicles, surveillance equipment, guns and
protective vests, and it reduced the department's reliance on tax dollars.

"It's been a godsend," Barnes said. "That's going to be a heavy hit on us."

Drug taxes are popular around the country as a way of hurting drug dealers
financially. More than 30 states have enacted them over the years, but the
levies have run into numerous legal challenges at the state and federal
level. The U.S. Supreme Court, deciding a Montana case, ruled four years
ago that states may not force people to pay drug-possession taxes in
addition to criminal penalties.

However, North Carolina's law is slightly different. It levies the taxes
immediately after suspects are arrested for possession but before they are
convicted and punished. A person is charged $200 per gram of cocaine and
$3.50 for every gram of marijuana. The tax is doubled if not paid within 48
hours of an arrest.

North Carolina has been much more aggressive than other states in enforcing
its drug law. The $26 million collected is 10 times greater than any other
state. The tax is popular with police because 75 percent of the money
collected goes back into law enforcement agencies. The rest goes into the
state's general fund.

The tax also has been politically popular. Lawmakers have gotten credit for
being tough on drug dealers, and voters like the tax because of its
punitive nature.

Shaw was out of town and attempts to reach him Friday were unsuccessful.

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