New York Cigar Tax Shift Defeated

Also rejected in the budget was the Governor’s proposed new excise tax on e-cigarettes and liquid nicotine.

New York convenience store retailers and suppliers worked together to keep a harmful shift in cigar excise tax out of the new state budget approved this week by Governor Cuomo and the Legislature.

Jim Calvin, president of the New York Association of Convenience Stores, commended his retail and distributor members as well as the Cigar Association of America for successfully warding off the policy threat.

Cuomo had proposed to switch the tax from 75% of wholesale value to 45 cents a stick. This would have doubled the price of two-packs of value cigars sold in convenience stores while giving luxury cigars a huge tax break. It would have driven C-store customers away by giving them an incentive to avoid the higher tax by purchasing cigars from neighboring Pennsylvania where the state excise tax is zero, or Native American enterprises that refuse to collect state tax, or untaxed online sources.

Also rejected in the budget was the Governor’s proposed new excise tax on e-cigarettes and liquid nicotine. While the 10 cents per milliliter would have been relatively modest, NYACS opposed it on grounds that once a tax like this is established, Albany can’t resist jacking up the rate to excessive levels that drive away customers to untaxed sources, costing c-stores business, said Calvin. Also omitted were additional restrictions on marketing and use of vaping products the Governor had proposed.

The worst news in the budget for c-store operators was a new 911 surcharge they will have to collect on prepaid wireless phone cards that NYACS opposed, although it was modified to lessen the administrative burden on retailers.

Cuomo proposed a two-tiered state surcharge of 60 cents on transactions under $30, and $1.20 on transactions of $30 or more, almost impossible for cash registers to process. The final version blended them into one, at 90 cents per transaction, and allows counties and New York City to levy their own, additional surcharge of up to 30 cents per transaction.

Cuomo wanted retailers to remit the state revenue to the state Tax Department quarterly, but remit the city/county revenue directly to the city or county monthly — an administrative nightmare for retailers. The final version directs retailers to remit both to the state Tax Department on quarterly. It also allows stores to retain an administrative fee of 3% of the state and local surcharge they collect.

 

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