'BLACK MARKET' TAX MIRRORS PROHIBITION

JACKSON - Holy deja vu all over again! Mississippi's black market tax
scheme still lives in the Legislature after being buried for 40 years!

Last week Mississippi House members by a better than a two-thirds margin
voted for a resolution to get the Senate to go along with filing a bill to
slap a tax on the possession of illegal drugs - cocaine and such.

Sound cockamamie? Well, House members who pushed the idea and got 84 votes
for it (after one brief failure) said three other states already have such
a law, and it's bringing in between $10 and $25 million a year.

You might describe the House proposal as a 21st century version of the
state's old black market tax on illegal booze that went out of business
when the Legislature repealed statewide prohibition in 1966.

As this was written, there had been no movement by the Senate to suspend
the deadline on new bills at the current legislative session so the
proposed bill to tax illicit drugs can be considered.

Even if nothing comes of this novel idea to get cash from hash, it points
up how desperate the search for revenue to fund the FY2006 budget has
become up at the Legislature.

Most lawmakers around now probably had never even heard of the state's
famous - or infamous - "black market" tax on illegal liquor that we
collected back in the days of statewide Prohibition.

Until 1966, the sale of ALL distilled alcohol except 4 percent beer was
illegal in the eyes of the state's dry laws.

However, folks could buy Hadacol, the popular youth-restoring tonic, or Dr.
Tichenor's Antiseptic, for everything from mosquito bites to throat gargle
- - each with almost 70 per cent alcohol - legally over-the-counter.

Despite the statewide prohibition law that had been enacted in 1908,
thousands of federally bonded cases of liquor were known to be sold in at
least two dozen counties, often openly in package stores and bars on the
Gulf Coast and some Mississippi River towns.

Lawmakers in 1944, at the height of World War II when the term "black
market" was familiar as applied to contraband rubber tires or gasoline sold
outside government rationing, enacted a 10 per cent black market tax of
their own on contraband goods.

Shrewd old legislators knew that the biggest Mississippi contraband being
sold was booze; we're not talking about old-fashioned moonshine but the
federally bonded variety.

Whiskey became arcanely described in the law as "tangible personal
property, the sale of which is prohibited by law."

Collecting the 10 percent tax was given to the State Tax Collector, an
obscure constitutional office that dated back to the early days of the
state's 1890 Constitution.

With no chance of getting prohibition repealed, legislators figured the
black market tax on illegal liquor at a time of war would be a good device
to get some needed revenue out of the liquor trade, and managed to do it
without stirring up a big ruckus over the perennial wet-dry issue in the state.

The only problem was how to get the big bootleggers who ran most of the
traffic to pony up the state tax.

State efforts to collect the 10 percent tax were far from effective until a
32-year-old Grenada County legislator named William Winter in 1956 was
appointed to fill a vacancy in the State Tax Collector office.

Winter found out very quickly the great bulk of bottled booze - hundreds of
cases of the bonded liquor imported into the state - was being bought
through Louisiana liquor wholesalers because that state collected only a
small tax on exported whiskey and wines.

The ex-lawmaker installed a business-like system with the cooperation of
the Louisiana Revenue agency to get copies of invoices of booze shipments
from that state destined for Mississippi wholesalers.

Actually, Winter realized he would have to concentrate on a handful of big
Mississippi bootleggers who imported and warehoused virtually all the booze
coming into the state. They would resell it by the case to bootleggers who
set up shop in bar or package stores wherever they could get local county
or town authorities to let them operate.

Winter dealt only with collecting the black market tax at the wholesale
level, since that was where the big money was anyway. He billed the
wholesalers for the amount of black market tax they owed based on the
invoices of shipments he got from Louisiana.

They usually paid up, but his agents, though not law enforcement people,
made regular rounds of the big wholesalers to make sure they weren't
cheating the state.

Within a couple years, the black market levy was bringing in over $1.5
million a year for the state general fund, a significant revenue sum in
those days.

As the saying went back in those days, "the drys had their law, and the
wets had their whiskey, and the state got the taxes from it." A neat setup,
but highly hypocritical, and again it made Mississippi a laughing stock.

State law allowed the state tax collector to keep 10 percent of what he
collected, so that made Winter, even after he paid expenses to run his
office, by 1960 one of the nation's best-paid state officials.

You'd think Winter would be happy with such a cushy job, but he wasn't.
From the time he first accepted appointment to it, he advocated abolishing
the office and for the state to find a better way to deal with the liquor
trade.

Four years later, state legislators took him up on eliminating the office,
but meantime added a 15 percent sales tax on illegal booze, using the same
system that Winter had initially set up to collect it.

The House's proposed tax on illegal drugs, much like the old black market
liquor tax, wouldn't describe dope as such, only as "unauthorized
substances." Deja vu anyone?