Monday, June 02, 2008

DOH Promotes the Black Market

AS the NY Times' City Room Blog reported last week, the Department of Health is waging a "relentless campaign" to get New Yorkers to stop smoking. The gist of the Department's message is that smokers could be saving themselves a bundle when the price of a pack of smokes rises to $8.5 when the new state tax goes into effect: "On Tuesday, the state tax on cigarettes will rise by $1.25 a pack, driving up the cost of a typical pack in New York City to around $8.50. The city’s Department of Health and Mental Hygiene, which has waged a relentless campaign against smoking since 2002, is promoting that fact, telling smokers that they could save $3,000 a year if they quit a three-pack-a-week habit. They could use that money, the city says, to buy season Major League Baseball tickets ($2,025), a quarter-carat diamond engagement ring ($2,799) or a 10-day Caribbean cruise ($1,750)."

Only if it were true; but thanks to the cowards running both the state and city governments it doesn't come close to the truth, and borders on the kind of false advertising that gets retailers prosecuted. The reason? The failure to close the Indian tax exemption loophole will mean that these scoundrels will have an extra $1.25 vig to play with when they flood the streets with non-taxed cigarettes-something the Times neglects to mention.

In fact, the City Room did mention this late last year in another post it did on tax avoidance: "New York City loses more than $40 million in revenue each year from the people who avoid paying cigarette taxes, according to a report [pdf] released today by the city’s Independent Budget Office." And the blog goes on to point out that: "But the higher taxes also increase New Yorkers’ incentives to buy cigarettes from lower-tax areas, including Indian reservations, and from Web sites that claim to sell “tax-free” cigarettes — even though, with few exceptions, “no cigarettes available to New Yorkers are legally free from taxation by the city and state,” the report says."

As we have pointed out before, the black market not only devastates local bodegas and convenience stores, but hits New York tax payers hard: "The budget estimate estimated that $43 million in city cigarette taxes went uncollected last year." This tax avoidance, a phenomenon that a NY Post editorial hit out at a couple of weeks ago, also aids and abets criminal enterprises, including terrorists.

So while we are glad that people are begining to realize that smoking is one of the dumbest things they can do, but we'd be even happier if our state and city officials would just enforce the law. This way, legitimate retailers would sell the product so that they, and not just the state and the smugglers, could make a profit.