N.Y. C-Store Industry Wins Tobacco Fee Rollback

State budget rolls back "astronomical" increase to "more modest level" Mar. 31, 2011

ALBANY, N.Y. -- "The tobacco registration fee nightmare that has haunted New York convenience store operators for the past two years is over," said James Calvin, president of the New York Association of Convenience Stores (NYACS). In the new state budget being adopted this week by Governor Andrew Cuomo and the state legislature, the astronomical fee hike enacted in 2009 is being rolled back to a more modest level.

The increase would have taken the fee from $100 per store per year to either $1,000, $2,500 or $5,000, depending on total gross sales--"a cynical ploy hatched [image-nocss] by public health advocates to force 40% of the state's tobacco retailers out of the tobacco trade," he said.

NYACS and three other retail associations filed a legal challenge, however, obtaining a court order temporarily freezing the fee at $100 pending a final decision, which is still being awaited. With so much at stake, NYACS and its allies said that rather than risking losing the case, they should pursue the certainty of legislative action rolling back the fee. These negotiations produced agreement to set the fee at $300 per store per year, which was scheduled to be approved Friday day by the state senate and assembly as part of the 2011-12 state budget.

The $300 fee is retroactive to 2010. That means stores that paid $100 for 2010 and $100 for 2011 will now owe $200 more for each of those two years. Payment of the full $300 for calendar 2012 will be due on September 20, 2011. Thus, some stores will incur a one-time hit of $700 during 2011. But the alternative was a one-time "whack" of $2,800 to $14,800, depending on gross sales, if the court were to reinstate the higher fee schedule.

"The $300-a-year compromise may not be the perfect solution, but it gives the majority of our retail members the chance to remain in the all-important tobacco category without paying a king's ransom every year," said Calvin.

Retailers who in September 2009 sent in their 2010 renewal application with the higher fee amount before the restraining order was issued, will receive a refund or credit from the state tax department for the excess amount, NYACS said.

NYACS was joined in the lawsuit by the Long Island Gasoline Retailers Association, the New York State Association of Service Stations & Repair Shops and the United 7-Eleven Franchise Owners of Long Island & New York.

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