The Indians of NY State continue to give the tax payers severe agita-and the fiscal results aren't very pretty. As the NY Post reported, tax evasion-from Indian as well as non-Indian sources-have created a huge budgetary shortfall: "The underground tobacco market is spreading like a fast-growing cancer in the wake of tax hikes that make New York cigarettes the most expensive in the nation -- and it's costing the state tens of millions a month in lost tax revenue, a Post analysis has found. Illegal cigarettes are pouring into neighborhood bodegas by the truckload from neighboring Indian reservations, lower-tax states in the South and even as far away as China, authorities say."
This is the gift that the accidental governor is bequeathing to us all-but particularly to the new occupant of the office who will be faced with trying to make Indian buttleggers follow the law: "Government data show that New York state is being smoked out of as much as $20 million a month from all these illegal cigarette purchases -- an estimated 7.3 million packs a month sold off the state tax radar...Sales of taxed cigarettes have plummeted 27 percent since July, when state lawmakers raised the excise tax to $4.35 a pack on top of the city's tax of $1.50, making the average price of Marlboros here $11.60, with some shops charging as much as $14."
What the state did-but it was Governor Paterson's foolish play-was irresponsible. You don't raise the tax before there is an enforcement mechanism in place-as we cried out in the Albany wilderness at the time. But it is the state's convenience stores that are being beaten bloody by the tax inequities-and the resulting unfairness has led to desperate store owners looking to stay in business by joining the lawlessness.
The Post has this story as well: "It doesn't take much coaxing to get otherwise legitimate Big Apple businesses into the illegal cigarette trade. "They come out here like they are salesman from Pepsi or the potato-chip company," said the owner of a north Bronx bodega that sells smuggled Newports and Marlboros for $8 a pack. "I don't know how the city is going to stop it. The city is losing a lot of tax money," he said. "They are killing themselves, because no one is paying $12 for a pack of cigarettes, and I'm not paying taxes on the money I make selling them." His supplier provides him with cartons between $45 and $50 a pop, which gives him a $30- to $35-per-carton profit."