Smoke and Mirrors

The Alliance has been fighting the black-market creating increases in the cigarette tax for the past five years. We were particularly upset in 2002 when the newly elected mayor, someone who had given no hint of his predilections in this area, increased the levy by a city record 1800%. When we predicted it would lead to rampant smuggling and hardship for the city's 13,000 bodegas, the mayor called our lament, "A minor economic issue."

Well unfortunately we were right. Legitimate outlets in New York City have lost 60% of their cigarette sales while black market activity has proliferated all over our neighborhoods. What exacerbates this situation is the fact that a great deal of the smuggled smokes is obtained from Indian retailers who, because of Governor Pataki's pusillanimity, aren't forced to charge the taxes that the law mandates they levy on non-Indian consumers.

That is why we came to City Hall yesterday, and were joined by the Bodega Association, NYACS, KASBSC and the Newsstand Operators Association, to protest the mayor's call for an additional 50 cents a pack increase in the tax and the governor's call – how do you say chutzpah in Hungarian? – for an additional $1.50 a pack in the state levy (while simultaneously asking to delay the enforcement of the Indian sales for another year).

Headlining the press conference were two lawmakers, Councilman Koppell and State Senator Klein, who have been in the forefront of this effort for tax fairness. As both Koppell and Klein pointed out, it makes no sense to allow a tax loophole to exist if you are truly interested in smoking cessation.

The fact that New Yorkers can get in a car and travel 50 miles East to an Indian retailer in Mastick and buy a carton of smokes for $25 when the same carton goes for $75 in NYC demonstrates the absurdity of claiming that the additional tax will help stop kids from smoking. The price disparity means that the city and state have created a bonanza for buttleggers who load up vans on Long Island and generate millions of dollars in illegal street sales selling discounted packs on every New York street corner. These illegal vendors are a direct threat to the kids the mayor claims he is trying to save (last we looked the street corner sellers weren't scrupulously proofing their customers for age).

All of this is costing the city and state hundreds of millions of dollars. As today's incisive NY Sun editorial points out, "And even while current taxes go uncollected, both the mayor and the governor have proposed their own competing additional tax hikes on the New Yorkers who pay the cigarette taxes." This is not only self-defeating and harmful to the consumer it cripples the city's small businesses that sell cigarettes. As long as it is legal to do so, the government has an obligation to enforce the law and protect legitimate store owners.