Smoking Guns

Did you happen to hear the news? The Indian Aggrandizement Act is now law-and with cigarettes in the city rising to $10 a pack, the new Indian war cry is, "Ca Ching!" As City Room reported yesterday: "Cigarettes in New York City will top $9 a pack — and in some cases more than $10 — starting Wednesday, as a federal tax more than doubles to $1.01 per pack. With taxes having increased last year as well, the price of each pack now carries $5.26 in government fees in New York City, making this one of the most expensive places in the country to smoke." What this means, in spite of the smoke get in your eyes myopia of Michael Daly, is that the bootlegging Indian tax avoiders will be raking it in-already more than 50% of all cigarette sales in NY State are being done through these untaxed reservation outlets.

So where's the crackdown;? And how come the state has yet to enact the law that would put a stop to this lawlessness-a tax avoidance causing the loss of over $1 billion tax dollars? As City Room points out: "While a 2007 study from the city found that higher taxes also prompt people to buy from Indian reservations, duty-free shops and other low-tax venues, this federal tax — which is to finance the states’ Children’s Insurance Program — touches all states. In addition, budget shortfalls are pushing more than 20 states to look to tobacco for revenue, even those that have avoided cigarette taxes for years or decades."

As the IBO reported two years ago: "In February of this year, Mayor Michael R. Bloomberg again proposed raising the city’s cigarette tax. “While the mayor’s proposal to again increase the local cigarette tax assumes that higher prices will further discourage New Yorkers from smoking, it may also encourage more city smokers to seek under-taxed cigarettes,” the report concludes." Even Daly can see this: "Of course, many tobacco junkies will try to buy bootleg cigarettes, primarily over the Internet. The laws against that should be toughened and enforced at city, state and federal levels. Bootleggers and second-offense buyers should get time in jail, the realm of the $100 pack."

Huh? We wish that columnists would do some basic research. It's not primarily the Internet where these buttleggers are prospering; it's Indian retailers combined with the state's faintheartedness that's costing the tax payers. As NYACS underscored in its report this year: "With an average excise tax rate of $25.42 per carton for the current fiscal year, these volumes would imply additional cigarettes tax receipts of $970million to $1 billion after adjusting for lost of business due to higher retail prices stemming from newly imposed excise taxes on Native-American stores."

All of this is going to go up; and even the health advocates recognize that higher taxes equal higher tax avoidance-with the greatest burden being placed on low income smokers. So, if you're going to allow smoking at all, then the legal outlets need protection; bodegas in the city have lost $250 million a year and counting-and the bankruptcies of small stores are at record highs. Congressman Weiner gets it: "Rep. Anthony Weiner (D-Brooklyn, Queens) warned that the higher taxes could mean "Christmas is coming early for Internet cigarette sites ... As we work to stop New Yorkers from smoking, we also need a renewed crackdown on smuggled cigarettes."

Sp who will take the lead here? With the state treasury hemorrhaging money, we need a champion to attack this blatant disregard for state law. Indians receive over $100 million in education aid for their children-money they willingly accept. But when it comes time to paying their cigarette taxes they balk; claiming a sovereignty that courts have denied. So, as far as social services are concerned, Indians claim citizenship rights; but when it comes time to paying taxes, they invoke sovereign immunity. Who's gonna fight this hypocrisy and call their bluff?