From: The Saratogian
By KYLE HUGHES NYSNYS News
ALBANY — New York is winning its war on smoking, but the battle rages on over the huge problem of cigarette smuggling.
Just weeks after the state imposed a $600 per carton penalty on smuggled cigarettes, the problem of bootlegging is worse than ever, Sen. Tony Avella (D-Queens) said Friday.
“The fact that 60 percent of all cigarettes sold in New York were smuggled in from other states, that’s unbelievable,” Avella said. “It’s incredible.”
He said New York has made considerable progress on reducing the prevalence of smoking, “but allowing all this underground activity to go on defeats the purpose.” The American Cancer Society says New York has one of the lowest smoking rates in the nation, and only 15 percent of adults smoke, a trend it attributes to higher taxes and restrictions like the Clean Indoor Air Act.
Avella has a new bill to establish a state task force capable of issuing subpoenas requiring the release of business records and establish new global policies addressing the multi-billion-dollar smuggling industry.
Anti-tobacco advocates credit Gov. Andrew Cuomo with revitalizing the state’s efforts to discourage tobacco use. That includes quadrupling the per carton penalty on smuggled cigarettes from the old rate of $150, a change that was included as part of the 2013-14 budget approved in March.
Cuomo also has succeeded in restricting the sale of untaxed cigarettes on Indian reservations, even as the tribes open cigarette manufacturing plants in Indian Country to get around the ban.
“There’s no doubt the state and the city are losing big bucks as a result of cigarette smuggling,” said Blair Horner of the American Cancer Society’s New York chapter.
“The administration has done a lot to cut down on the sale of brand name cigarettes from the Indian reservations,” he added. “Then again, you have smuggling operations up and down the East Coast.”
The potential profits are huge, thanks to differences in state taxes on tobacco. New York has the highest cigarette taxes in the nation, and Virginia the second lowest. That creates a powerful financial incentive to truck untaxed cigarettes to New York City, where bodegas and small shops commonly sell them without fear of being cited.
Cigarettes bought in Virginia for $15 to $20 a carton can be resold in New York City, where a carton normally sells for $120. The untaxed bootlegged cigarettes are resold to smokers at $60-$70 a carton. Experts put the cumulative losses from the smuggling in the billions of dollars.
“The sale of black-market, untaxed cigarettes has resulted in the loss of hundreds of millions of dollars in revenue to the state, robbing state health care programs designed to help children,” Avella said in announcing his bill to create a smuggling task force this week. “According to the Tax Foundation, a Washington, D.C., business-oriented tax research organization, approximately 60.9 percent of cigarettes sold in New York were smuggled in from other states. In addition, a study conducted by John Dunham & Associates on behalf of New York Association of Convenience Stores found that state taxes were not collected on one out of every two packs of cigarettes consumed in New York state in 2011.”
State Tax Department spokesman Geoffrey Gloak could not say Friday what the impact has been so far of the new $600 penalty on untaxed cigarettes since the law took effect June 1.