New York State is losing out on $1.6 million per day by failing to collect taxes on cigarettes sold through Native American tribal businesses as required by law. That was the result of a study commissioned by the New York Association of Convenience Stores (NYACS) and done by economist Brian O’Connor, Ph. D.
NYACS said the research shows that if Gov. Eliot Spitzer enforced a state law requiring the collection of taxes on Native American tribal sales of cigarettes to non-Indian customers new revenues to the state would range from $575 million to $625 million per year, according to Business First of Buffalo. Taxes aren’t likely to be collected anytime soon as the New York governor is embroiled in a sex scandal that may result in his resignation.
The findings by O’Connor, the former director of U.S. economics for IBM Corp., were documented in an updated report titled "An Update: Additional Cigarette Tax Revenue Sources for New York State."
Due to the increase in market share from the large cigarette excise tax rate hikes by New York state and New York City in early 2002 and other state and city governments in recent years, the estimate of the impact of Indian sales to non-Indians is nearly 40% higher than in O’Connor’s original cigarette tax loss study. That report was conducted for the Fair Application of Cigarette Tax (FACT) Alliance, which the convenience store group was a part of.
"This confirms that New York’s cigarette tax evasion epidemic is spreading," NYACS President Jim Calvin said. "While the Spitzer administration fiddles, the state continues to lose more than $1.6 million in legitimate tax revenue every day."
Neither Spitzer nor his predecessor, George Pataki, have enforced the 2006 legislation, which directs the tax department to pre-collect state taxes on cigarettes and motor fuel from wholesale distributors before they deliver those products to Native American tribal stores. Calvin has been among the most outspoken critics of the state’s failure to execute its laws.
The report also does not include tax revenue on sales of gas by Native American tribal stores to non-Native American New Yorkers and lost sales tax revenue on other taxable products sold at those outlets.