NEW YORK -- The Sheriff's unit of the New York City Finance Department that conducted a sweep of 1,700 stores licensed to sell tobacco products found 42% either peddling untaxed cigarettes or using counterfeit stamps to duck the combined $5.85 city-state tax, reported The New York Post.
"That is an alarming number," Jim Calvin, president of the New York Association of Convenience Stores (NYACS), which represents 1,600 outlets around the state, told the newspaper.
He said, "It's a reflection of the desperation of some store owners" trying to make ends meet in a jurisdiction with the highest cigarette tax in the nation.
The number of smokers in the city is falling each year--with Mayor Bloomberg crediting his administration's anti-smoking policies for the drop.
But tax revenues from cigarettes are plummeting even more quickly, said the report.
The city took in $158.5 million from its share of the cigarette tax in 2003. Last year, collections were down to $69.8 million, a 56% drop.
During that same period, the smoking rate fell 28%.
Finance Commissioner David Frankel said his agency's pursuit of cigarette tax cheats is as much about fairness as revenues. "At a recent outreach event in The Bronx, I had a guy who came up to me desperate for help because his family's delicatessen is going out of business because their competitors are selling illegal cigarettes and they refuse to do it," he told the paper.
"It's our job to protect them, and we're going to do that."
Most of the store owners caught in the sweep had only a few cartons of illegal smokes in their shops. But in one case, the agents seized 1,700 cartons of untaxed cigarettes and thousands of phony tax stamps.
In some cases, Frankel said the counterfeiting extends to the cigarettes themselves.
"They're mostly cigarettes made in foreign countries," he said. "They're brought in here and they're mislabeled and they're sold that way."
Frankel said the city is drawing up legislation to increase the penalties on those who flout the tax law because their impact "is devastating to small businesses" that are honest.
In an appearance before the City Council on Wednesday, Frankel said the penalties for those caught with a few cartons of untaxed cigarettes now is minimal.
Councilman Lew Fidler (D) urged him to be more aggressive. "Clearly, the people getting the four cartons are getting them from the people who have 40 cartons, who have the 4,000 [cartons] in the warehouse," Fidler said.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.