The analysis by Brian O'Connor, Ph.D., shows that if the administration of Governor David Paterson were enforcing the existing state law requiring collection of cigarette taxes on tribal sales to non-Indian customers, it would yield revenue "in the proximity of $1 [image-nocss] billion."
This month marks the third anniversary of that law. Yet, to the detriment of small businesses, state and local governments and anti-smoking programs, it has never been enforced by governors George Pataki, Eliot Spitzer or Paterson, allowing cigarette tax evasion to reach epidemic proportions, NYACS said.
Calling it "the forgotten billion-dollar stimulus," concerned businesses and public health advocates held a press conference in Albany on Monday to urge Paterson and legislative leaders not to forego this major source of new revenue as they assemble the next state budget.
"With New Yorkers being asked to absorb billions in spending cuts, new taxes and fee increases, it would be fiscally irresponsible to adopt a budget without tapping into this recurring revenue stream," said NYACS president James Calvin.
"Based on calculations by the governor's own Health Department, at least 100,000 smokers would quit if the tax were collected on all cigarette sales," said Russ Sciandra, Director of the Center for a Tobacco Free New York. "The public health benefit in human and fiscal terms is almost too big to calculate."
Richard Lipsky, spokesperson for the New York City's Neighborhood Retail Alliance, said, "In this dire fiscal emergency, the failure of the state to aggressively collect these taxes is no longer acceptable, if it ever was."
O'Connor's previous analysis in February 2008 pegged the tax loss at $600 million. Since then, the state excise tax on cigarettes almost doubled, from $1.50 a pack to $2.75, on June 3, 2008, triggering a new wave of tax evasion. Consequently, the portion of cigarette sales in New York on which no tax is paid (tribal, Internet, mail order and black market combined) now exceeds 50% for the first time, the report said.
Click hereto view O'Connor's tax loss analysis.
Meanwhile, Paterson plans to raise fees on stores that sell cigarettes, reported The Daily News. He wants to hike the $100 annual registration fee stores pay to sell cigarettes to between $1,000 and $5,000, depending on a store's annual gross sales.
The plan drew fire from Democrats and Republicans, said the report. "Why doesn't he just say we're against small businesses," said Assemblyman Micah Kellner (D). "It's an absurd proposal, particularly in hard times."
State Senator Dale Volker (R) called it "wrong and dangerous to drive social policy with tax policy." He said the plan is a double whammy to owners of small stores. On the one hand, they will be charged more. On the other, he said, they are at a competitive disadvantage because the Paterson administration has not gone after taxes owed for the sale of cigarettes to non-Indians on reservations.
Some struggling c-store owners said they would be forced to close if the fee passes, the report said.
Paterson said Monday store owners have made some "valid points," but he said the question is how the cash-strapped state would replace the $18 million the extra fees are projected to raise.
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