Cigarette Scam Takes a Hit

It just goes to show you what a little perseverance can do-along with an intestinal fortitude that three New York governors have certainly lacked. The feds have finally-thanks to Congressman Anthony Weiner-closed the loophole that allows Indians to send cigarettes, untaxed, through the US Postal Service.

As the NY Daily News opines: "The Indian tribes that have been peddling cigarettes in one of the greatest tax ripoffs ever are about to see their millions of dollars in illicit revenues go up in smoke. Good for New York. The House of Representatives yesterday joined the Senate in passing a bill to ban sales of cigarettes through the mail - the primary vehicle by which the tribes have flooded the market with untaxed butts. President Obama is expected to sign the legislation - and he must."

And Weiner really deserves this end zone dance-as his press release says: "The House today passed legislation that will give states and localities a major boost in cigarette tax revenue by giving law enforcement new tools to crack down on smugglers of tobacco and curb illicit tobacco sales over the Internet. The State of New York could see a windfall of $500 million and New York City could collect $150 million more from cigarettes."

And the federal law also allows for a law enforcement crackdown on the smuggling being done right off of the reservation. According to the News: "The bill would also target loading up a van with butts at, say, the Shinnecock Indians' store on Long Island and hauling them back to the city for resale. That kind of smuggling would be a federal felony."

It's time for Governor Paterson to call out the state troopers and cordon off the buttleggers-and expedite the Kruger-led effort to insure that all cigarettes sold in the state are embossed with a tax stamp: "Weiner said, “This new law will give states and localities a major revenue boost by cracking down on the illegal sale of tobacco and close a major source of finances for international terrorists and criminals. Every day we delay is another day that New York loses significant amounts of tax revenue and kids have easy access to tobacco products sold over the internet.”

And, as Weiner points out, the internet sales alone are costing NY's tax payers big time: "Estimates based on reporting from the New York State Department of Tax and Finance found that New York State loses up to $500 million from untaxed Internet tobacco sales and that New York City may lose as much as $150 million. According to a recent Government Office of Accountability (GAO) report, Hezbollah profited $1.5 million from the sale of illegal tobacco from 1996-2000."

Gee, what about the governor's low ball $200 million number? We've heard about creative accounting, but low balling potential tax revenue is not the usual example of how government gets creative-and the $500 million that Weiner mentions doesn't include the elaborate smuggling operations truckin' off the reservations.

Now it's up to the president to sign the bill-we'll give the News the last word: "By a vote of 387 to 25, the House yesterday moved the bill toward the President, who confesses to occasionally inhaling. He's surely taxed in full, as all should be."

Weiner Press Release Summarizes Legislative Provisions

1.The PACT Act Cracks Down on Illegal Tobacco Sales in the Following Ways:Ends Internet Sales of Tobacco by Banning Mailing of Cigarettes: Makes cigarettes and smokeless tobacco products non-mailable matter through USPS, except in limited cases. While FedEx, UPS and DHL have agreed not to ship tobacco products, USPS has continued to deliver tobacco products bought over the Internet.

2. Strengthens the Jenkins Act: Increases existing penalties from a misdemeanor to a felony, making it a federal offense for any seller making a sale via telephone, the mail, or the internet to fail to comply with all state tax laws. The legislation also empowers each state to enforce the federal law against out-of-state sellers sending delivery sales into its state by giving state Attorneys General the authority to seek injunctive relief and civil penalties against violators.

3. Empowers Law Enforcement: Allows the Attorney General to compile a list of delivery sellers who fail to comply with the PACT Act or states' tax laws.

4. Mandates Age Verification: Internet and other remote sellers will be required to verify the purchaser's age and identity through easily accessible databases. It also requires the person accepting delivery to verify their age.

5. Grants ATF Inspection Authority: The Bureau of Alcohol, Tobacco, Firearms and Explosives inspection authority, including on reservations, for distributors of cigarettes and creates a penalty for those who refuse inspection.

Matthew L. Myers, President of the Campaign for Tobacco-Free Kids, said, “We applaud Representative Weiner for working tirelessly to pass the Prevent All Cigarette Trafficking Act. When law, the PACT Act will help prevent and reduce smoking and other tobacco use by preventing the illegal sale of tax-evading, low-priced cigarettes and smokeless tobacco over the Internet and making sure that Internet and other mail-order sellers do not sell to minors. Indeed, the PACT Act offers Congress a unique opportunity to fight crime, protect federal and state tax revenues, and promote public health, all at the same time.”