As the NY Post reported yesterday, there may be a showdown that will force the Paterson administration to enforce the tax law on Indian smokes: "Tax-free cigarettes from Indian reservations will go up in smoke if some in Albany get their way. Lawyers for a state lawmaker and Gov. Paterson are scheduled to face off in an upstate courtroom tomorrow in a case aimed at forcing the state to follow the law and collect sales tax on every pack sold by the 200 or so reservation stores and via the Internet."
This is not insignificant by any means. Because of the high cigarette taxes in New York, one out of every three packs sold in the state are coming from tax evading Indian retailers, This is costing New York tax payers a fortune: "Last year, roughly 304 million packs of cigarettes were sold by New York's Indian tribes - and, as has been the practice for years, not a penny of tax was collected. As the state tax rises to $2.75 a pack - the highest in the nation - on June 3, New York would be forfeiting about $836 million in annual revenue by choosing not to collect taxes from reservations. In the city, the tax is $1.50 more."
So much for law and order. With budget shortfalls and tax hikes on the Albany agenda, you'd think that Governor Paterson and his advisers would be all over this. Think again: "Paterson has asked his staff to research the topic, and he wants to come to an agreement with the tribes, a statehouse spokesman told The Post. That is not sitting well with a host of critics. They are urging Paterson simply to follow the law." Shouldn't be that hard to do.
If higher cigarette taxes are the linchpin for reducing smoking rates, then it should be clear to one and all that tax evasion is allowing hundreds of thousands of smokers to keep feeding their addiction at a greatly reduced rate-not to mention the legitimate store owners who are getting shafted by the tobacco warriors: "It is driving hundreds of thousands of non-Indian customers away from licensed convenience stores, decimating their businesses," James Calvin, president of the New York Association of Convenience Stores, wrote in a recent letter to Paterson."
In NYC, where the state tax is seen and matched by an additional $1,50 per pack, the black market is flourishing, and no one is really taking this issue head on because of the fear of being politically incorrect. The mayor should get on his soapbox immediately-for the children, if not for the small store owners that he doesn't seem to give a fig about.