Gov. David Paterson wants to snuff out cigarette sales by drastically raising fees for stores that sell them, according to the New York Daily News. Paterson’s budget office projects cigarettes and other tobacco products would be sold at 40% fewer stores if his proposal is adopted.
The plan was quickly blasted by industry groups. “It really is outrageous,” said James Calvin of the New York Association of Convenience Stores (NYACS), who has battled New York lawmakers for more than a decade over tax issues.
Store owners now pay the state tax department a $100 annual registration fee to sell tobacco products. Under the new proposal Paterson is quietly pushing, a store with annual gross sales of less than $1 million would instead pay $1,000 a year. Stores with gross sales of $1 million to $10 million would pay $2,500 a year and sales in excess of $10 million would mean an annual fee of $5,000, the report said. The fees are based on overall product sales.
But Calvin said the fees would only push more smokers to buy their butts on the black market. “It makes no sense,” he said, adding the state hasn’t done enough to go after taxes owed from the sale of cigarettes on Indian reservations.
A state report shows New York is losing $1 billion a year in taxes from those sales, up from $600 million.
If passed, the fees would begin in January and should bring in $18.5 million in the coming fiscal year and $13.6 million the following year, state officials said.
Richard Lipsky, spokesman for the Neighborhood Retail Alliance in New York City, warned the proposal wouldn’t stop people from smoking but would boost sales on the Internet and black market.