DUVALL: Same old story on cigarette tax

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Eric Duvall

June 20, 2010

By Eric DuVall The Tonawanda News The Tonawanda News Sun Jun 20, 2010, 12:23 AM EDT

— — When was the last time someone in Albany had a new idea that didn’t involve raising taxes? Seriously, I’m asking. I would love it if someone showed me some sort of innovative approach to public policy problem solving that’s been undertaken by someone in state government.

Because right about now, I’m getting a little sick of the golden oldies.

The state is primed to raise the cigarette tax again on Monday, which is about the 40th time they’ve gone to that well when they needed to turn a quick buck.

Public health advocates applaud anything that hurts the tobacco companies, so of course they hailed the news as a landmark accomplishment. Yes, New York is tops in the nation in yet another taxing category. Pop the champagne!

I’ve said this before, but I’ll say it again: When politicians raise the cigarette tax, the last thing they want to do is have people quit. They’re raising the tax because they need the money, not because they care about preventing people from getting cancer or heart disease.

If all the smokers in New York quit, we’d be up the creek. The cigarette tax brings in billions for an already cash-strapped state.

Sure, the state will get a quick infusion of cash, but really they’re eventually going to lose a revenue stream and hurt small businesses. If cigarettes hit $9 or $10 per pack when bought over the counter at the store, as they will if lawmakers vote yes on Monday (which they will because the alternative is shutting down the entire state government), all us smokers are going to do is start finding cheaper places to buy them.

You see, there’s this thing called the Internet. In about 30 seconds of Googling, I found a website that would sell me 20 packs for $43. That’s $2.30 per pack, or about $7 cheaper than what I’ll have to pay if I buy them over the counter in New York. I don’t think it’ll take a genius to tell you what smokers will do. That is, if they’re not doing it already.

Sure, there’s the convenience factor of needing a pack NOW, rather than waiting for it to show up in the mail, so I’m sure people will cough up — get it? — the 10-spot for a pack once in a while. But rest assured, the bulk of the sales will be made outside the state’s ability to collect the tax and will ultimately decrease the effectiveness of the tax.

And tell me where I’ve heard this one before: The other half of the plan is to collect taxes on cigarettes sold by Native Americans.

Time and again, the state has tried and failed to collect taxes on Indian cigarettes. Why should anyone believe this time to be different?

Well, the Paterson administration has thought of an end-around (probably an illegal one) that might work. They’re going to force the wholesalers who sell the cigarettes to Native American smoke shops to pay the tax and include it in the price the retailers pay to get the cigarettes in the first place.

Here’s the catch: Everyone agrees that the laws in place guarantee tax-free sales between Native Americans. If the wholesalers are paying the tax without knowing who the retailer is going to eventually sell the product to, how can it work? Paterson’s budget director says wholesalers can intentionally inflate the number of cigarette cartons reported as sold to Indian smoke shops, so they’ll have some room to sell to fellow Indians and not charge the tax.

It’s that, or the state comes up with some kind of rebate system.

Either system would be surely subjected to a court review, and considering either system does mean that Native Americans will be taxed on sales to fellow Native Americans, it’s likely to be struck down.

And if it isn’t, I sincerely hope they go back to burning tires on the Thruway. That’ll show ‘em who’s boss.

Yet another reason this makes no sense: The state keeps saying that retailers near reservations lose money because no one buys cigarettes at those stores when the one a mile up the road is so much cheaper.

Um, maybe the state should shoulder some of the blame? The reason non-Indian retail prices are so much higher is the tax itself. The state is the one pricing these “poor merchants” out of the market, not the Indians.

Of course, logic doesn’t matter. This is about a weak governor forcing an even weaker legislature into action, just so everyone can look like they’re actually doing something.

Whether that something makes sense is another matter.

Eric DuVall is the managing editor of the Tonawanda News. His column appears Wednesdays and Sundays. Contact him at eric.duvall@tonawanda-news.com.

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