BUFFALO, N.Y. -- Doubling New York's cigarette tax in the next state budget, as is reportedly under consideration, would be disastrous for state revenues, public health and small businesses, Wilson Farms Neighborhood Food Stores said in a media statement citing data from the New York Association of Convenience Stores (NYACS).
According to NYACS, the following scenarios would occur as a result of the new cigarette excise tax:
It would generate less revenue, not more. Partly due to consumption declines, but primarily due to tax evasion, the state collects less cigarette excise tax [image-nocss] today at $1.50 per pack than it did in 2001 when the tax rate was 39 cents a pack lower. Remember, as more smokers shift their purchases to tax-free outlets to avoid the tax hike, the state would lose not only the new $1.50 but the original $1.50 as well. It would hinder, rather than help, anti-smoking efforts by driving more sales to outlets beyond the reach of tobacco regulation, and the monitoring by state or local health departments to detect and punish sales of cigarettes to children. It would throw fuel on a cigarette tax evasion fire that is already blazing out of control. New York already is losing $1 billion a year due to "tax free" sales by Internet vendors, Native American tribal stores, and black market entrepreneurs. Half the smokers in New York State admit buying from these outlets; the tax hike would double the incentive for the rest of them to follow suit. Since most of the Native American reservations are north and west of Albany, this unfair tax would disproportionately penalize upstate."If the State of New York was collecting all of the cigarette taxes it's supposed to by law, there wouldn't be any need for a conversation about a new excise tax," said Wilson Farms president and CEO Paul Nanula. He added, "If the revenue from the current law is not in the new budget, then one could conclude that our state government is premeditating not to enforce the law."
Nanula asked people share those concerns to contact the governor to voice their opinion.
According to economist Dr. Brian O'Connor, collecting the excise tax on sales of cigarettes and motor fuel by Native American tribal stores to non-Native American customers would generate $600 million in new revenue in 2008-2009.
Click hereto view O'Connor's report.
Buffalo, N.Y.-based Wilson Farms currently operates 196 convenience store and gas station locations across the state of New York.
Meanwhile, facing the likelihood of a near doubling of the state excise tax on cigarettes, NYACS told state legislators Monday that approving it would amount to "signing the death warrant" for New York's c-store industry.
"Because of the tax avoidance pandemic it is sure to unleash, voting for the new cigarette tax increase equates to a death warrant for mom-and-pop convenience stores," said NYACS president James Calvin in a note attached to a copy of a mock "death warrant" certificate distributed to each legislator.
"Please don't sign it," Calvin implored the legislators. "Please don't do this to these small business families who have never asked the state of New York for anything other than the chance to compete fairly for retail trade. Please don't do this to these working families that toil seven days a week striving to serve their customers, pay their bills, provide employment, collect and remit taxes to the state, comply with a litany of state and local regulations, and earn a living."
New York's cigarette tax is $1.50 per pack, and has already resulted in half the cigarettes consumed in the state being purchased without payment of any state tax, NYACS said. The increase being considered as part of the new state budget this week is reported to be $1.25 to $1.50, which would intensify the cigarette tax evasion stampede to a level unbearable for tax-collecting c-stores.
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