Posted on 02/14/2003 7:09:24 PM PST by Marianne
ALBANY - Internet and mail-order sales of cigarettes, a booming business for Seneca and other Indian business owners in a state with the nation's second-highest tobacco tax, can be halted by New York, a federal appeals court ruled Thursday.
The law, designed to halt the sale of bootleg cigarettes, was blocked two years ago by a district court judge. The U.S. Second Circuit Court of Appeals in Manhattan ruled, 2-1, that it does not violate interstate commerce statutes as two tobacco companies had argued.
The ban on Internet and mail-order cigarette sales would be accomplished by severely penalizing commercial carriers, such as United Parcel Service and Federal Express, for shipping cigarettes directly to consumers.
State officials hailed the decision as a new tool to fight the sale of untaxed cigarettes, especially to minors, and to help Albany collect more taxes as the state faces an $11.5 billion deficit.
Representatives of Seneca Nation of Indians tobacco companies condemned the ruling as a slap at Indian sovereignty. They said a loophole in the law permits sellers to continue, using the U.S. Postal Service. The court, however, insists that provisions permit the state to prosecute distributors for untaxed sales directly to consumers, no matter what shipper they use.
The law has no effect on walk-in sales at Indian smoke shops, and smokers can still drive to bordering states with lower taxes to buy cigarettes. Critics said the ruling could lead to further crackdowns on Internet sales of nontaxed goods besides tobacco.
State officials said the decision upholds a long-standing effort to ensure that cigarette sales are carried out legally, that minors are not sold tobacco products and that sales taxes are collected.
"Today's decision is a major victory in New York State's continuing effort to protect our children from tobacco products, and the lifetime of addiction and illness that often follows," said state Attorney General Eliot L. Spitzer.
The law was challenged by two tobacco companies that sell cigarettes by mail order. Brown & Williamson Tobacco Corp., a Kentucky-based company whose products include Kool and Pall Mall, has not decided whether to appeal the ruling, said company spokesman Mark Smith. Santa Fe Natural Tobacco, a New Mexico company owned by RJR Tobacco Co., did not return calls. Attorney Joseph Crangle of Buffalo represents many of the Seneca tobacco merchants who run some of the nation's busiest Internet and mail-order cigarette companies. He said the ruling will make it more difficult for his clients to sell their products.
While he noted the law cannot order what can and can't be shipped using the U.S. Postal Service, Crangle said the court did note that distributors of tobacco products can be prosecuted for shipping cigarettes to consumers.
He said the law will not prevent Seneca businesses, which have become multimillion-dollar tobacco distributors, from continuing to ship their products out of state.
Crangle called the law "the height of hypocrisy" because it comes after the Pataki administration several years ago decided not to collect taxes on cigarette sales to non-Indians at reservation smoke shops. "This is just another example of the state trying to encroach upon Indian sovereignty rights." The court insisted the law does not discriminate against tobacco companies trying to engage in interstate commerce.
"Cigarettes will continue to flow into New York State in the same manner they always have," the court said. It added that consumers will buy tobacco products "in a manner that allows the seller to verify the buyer's age and to collect the state excise tax."
Non-Indian retailers have long complained that Native American businesses were unfairly stealing their business by selling tax-free cigarettes. The criticism was bolstered by big increases in the state cigarette sales tax - now $1.50 per pack - that have left many smokers flocking to tax-free havens.
A business group last month estimated that more than 40 percent of cigarettes consumed in the state are purchased tax-free from Indian reservations, the Internet or bootleg operations. It estimated the state lost $900 million in taxes to the illegal sales.
The Internet and mail-order ban was blocked before it took effect in 2001 by U.S. District Court Judge Loretta Preska, who said it violated interstate commerce provisions. She also said the state failed to try less discriminatory means to slow the sale of tobacco to minors or to halt the sale of nontaxed cigarettes. She said a number of loopholes in the law - specifically that the U.S. Postal Service could be used to ship the nontaxed cigarettes - are "fatal to its effectiveness."
The appeals court Thursday rejected her claims, calling the loopholes "not significant."
Fines of up to $5,000 per violation by shippers or transporters can be levied. Those who possess or transport 30,000 or more cigarettes without a state tax stamp - basically a truckload - face up to seven years in jail. Retailers who sell illegal cigarettes also can lose their alcohol and lottery licenses.
(I originally read mention of this paper over @ C&S.)
Every tyranny these days is "for the children." It's not for the tax revenue, it's for the children.
Way back in the early 20s there was a movement by a bunch of euphorian, nazi woman's groups to stop the use of alcohol. They wanted a society to match their idea of what society would be all about. They enlisted the help of a powerful Senator from Minnesota. His name was Volstad. He wrote the Volstad act and pushed it through Congress like a bull. Volstad was very left wing, even for his time. He was a socialist, as a matter of fact. Nobody was looking, or thinking, when the Volstad Act was passed and the action of this law was unconstitutional, immoral, and totally without cause or merit, but it passed (The People's representatives must have been asleep). The 'law' did only one thing, it made a whole new class of criminal, the People, the people that wanted to drink. It also made organized crime one whole hell of a lot of money and put them in the billionaire class. By supplying the American people with what they wanted, they put billions of dollars into their coffers. The strength of 'the mob' was a direct result of the Volstad Act, 'prohibition'. It was the 'unintended consequence' of, yet another leftist idea. The freedom we enjoy must be preserved, any freedom. If it is the freedom to have a drink, or the freedom to have a smoke, it doesn't matter.
The Volstad Act was finally struck down by an act of Congress, the 21st Amendment to the Consitution of these here United States. That Act, the Volstad Act, made criminals out of regular, law loving citizens. Any law that makes us, the citizens of this country, criminals is a law that must be stuck down, as it was then.
When we, the people let down our guard, the verman from the left will attack. They will attack our rights because they want to rule us, they want control over all the facets of our lives, and they want, and need, our productivity to fuel their elitist socialist program. Socialism brings everyone down to the lowest common denominator, but raises the 'ruling class' to elite status. Capitalism raises the bar to it's highest, and gives rewards for hard work and dedication. The ideological difference is 180 degrees, and the idea of freedom is imbedded in capitolism. With out a free market, there is no freedom or liberty. The idea that government provides all is a socialist eutpia that has never, and will never, work. Man is meant, by God, to be free and he will fight for that right.
Hmmm, feds protecting feds.
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