Currently, retailers pay $100 a year to register. Under Governor David Paterson's proposed budget, this fee wouldincrease to $1,000, $2,500, or $5,000 a year based on the store's gross salesof everything, not just tobacco. The administration predicts these "astronomical" fees would reduce the [image-nocss] number of stores selling tobacco by 40%; however, 60% of New York lottery merchants also sell tobacco. If 40% of them dropped tobacco,approximately 24% of all existing lottery outlets would lose customer traffic, and therefore lottery sales, since smokers would no longer be entering the store.
"Fewer customers means lower sales," said James Calvin, president of NYACS, which has been leading the fight against the fee increase. "Even a tiny drop in lottery salesless than 1%would wipe out the projected $18.5 million in new revenue from the tobacco fee increase.
"But based on our industry's experience, we expect the impact on lottery sales would be far greater, which would create a hole in the general fundnot just this coming year, but every year after that."
NYACS also argues it is unfair to charge tax-collecting tobacco retailers a $1,000 to $5,000 fee when their Native American competitors, who have lured away millions of non-Indian customers with dramatically lower "tax free" cigarette prices, do nothave to register or pay any fee at all.
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