NARCOTICS : Dealers May Find New Drug War Tactic Very Taxing : States are placing levy on illegal sales. Failure to pay it can lead to huge penalties if traffickers are caught.

An increasing number of states are adopting an unusual weapon in the war on drugs: They are starting to establish taxes on the sale of illegal narcotics, then using drug dealers’ failure to pay the taxes as additional grounds for prosecuting them.

The idea is a variation on the technique the federal government used against Mafia mobster Al Capone and others during the Prohibition days of the 1920s. Capone eluded murder and racketeering charges, but Treasury agents finally snared him for tax-evasion.

In the case of drug dealers, state authorities may not be able to send them to prison just for evading sales taxes, but they can impose huge fines and other monetary penalties. “It’s pretty effective at hitting dealers where it hurts--in their pocketbook,” said Allen Sorlie, an auditor for the state of Minnesota, which is using the new weapon aggressively.

The key to the concept is that U.S. law makes it easier to prosecute a person for civil tax evasion than on criminal charges because constitutional safeguards for the defendant are less rigorous. And authorities can seize a tax-evader’s assets without a court order.

This year, more states than ever are seeking to use such tax laws against drug traffickers. Tax administrators from 25 states will meet in Washington this month to discuss their experiences.

Authorities do not expect the drug dealers to pay the tax up front and thus risk tipping off police to their activities; instead, they hope that the failure of the dealers to pay their taxes will make them subject to additional charges once they are caught.

Minnesota, which technically requires drug dealers to buy tax stamps for every sale they make, has had only two purchasers in the five years that the law has been on the books--and both of them were stamp collectors, not narcotics traffickers.

The Minnesota tax is $3.50 on the sale of each gram of marijuana and $200 a gram for heroin and other narcotics. And the tax stamps are emblazoned with the state seal. Texas has stamps that sport a skull-and-crossbones--with Drugs or Tax written across the face.

In the end, the tax does not bring in very much revenue. Minnesota has collected only $1.7 million in taxes and penalties from drug dealers over the last five years--out of a total of $35.6 million in confiscated drugs--barely enough to pay for running the program.

But, if a drug dealer is caught without the stamps, the law enables authorities to come down hard. Dealers then must pay the uncollected tax plus a 100% penalty.

Critics of these laws offer a wide range of objections. Some argue that the government must legalize the drugs in question before it may tax them. Others complain that, by taxing drugs, states give the impression that using them is legitimate.

But Robert Ebel, the fiscal expert who developed the Minnesota plan, argues that it provides prosecutors with an additional--and effective--tool and discourages drug consumption by raising the price.

So far, there has been no direct challenge in the federal courts to the drug taxes imposed by states.

Indeed, the concept is not a new one. After Prohibition, government agents used the 1937 Marijuana Tax Act to combat use of that drug.

The Marijuana Tax Act was thrown out in 1970, mainly because of concern that it violated the protection against self-incrimination. Dealers who paid the tax had to identify themselves to police, who then could seek to prosecute them.

Minnesota’s new law seeks to overcome that shortcoming by promising stamp buyers that their names will be kept confidential--and so far it has survived attempts to overturn the tax in state courts.

But such an objection led South Dakota to repeal the state’s drug tax on the ground that compelling a person to register illegal activity with authorities violated the 5th Amendment.

Taxing Illegal Drugs

States are beginning to tax the sale of illegal narcotics as a way to help combat drug trafficking. If drug dealers fail to pay, authorities then can fine them or cite them for tax-evasion--another weapon in the anti-narcotics arsenal. If they do pay, the money reduces the size of the dealers’ pocketbooks--and gives the states added revenues.

Here is a map showing the various methods that states are using to tax narcotics sales:

* STATES REQUIRING A DRUG-TAX STAMP

Twenty states require narcotics dealers to buy a drug-tax stamp to affix to the goods they sell. These are similar to the tax stamps displayed on cigarette packs and liquor bottles.

Alabama, Arizona, Colorado, Idaho, Indiana, Iowa, Kansas, Louisiana, Maine, Minnesota, Nebraska, Nevada, New Mexico, North Carolina, North Dakota, Oklahoma, Rhode Island, Texas, Utah, Wisconsin

* STATES WITH A DRUG EXCISE TAX

Three states have enacted excise taxes on the sale of illegal narcotics. This plan is similar to the drug-tax stamp, but does not require that the dealer affix a stamp to the goods he sells.

Florida, Georgia, Montana

* STATES WITH SALES OR INCOME TAXES

Five states--including California--have enacted ordinary sales taxes on narcotics transactions or else have imposed income taxes on gains reaped by drug dealers and others who make money from illegal activities.

California, Massachusetts, Michigan, Ohio, South Carolina

* Alaska and Hawaii do not have a drug tax.