Internet smokes put out for good

New York Daily News ^ | 2/14/03 | ROBERT GEARTY and WILLIAM SHERMAN

[kattracks]

Internet sales of tax-free cigarettes in New York State went up in smoke yesterday after a federal appeals court upheld a state ban on direct sales to consumers.

The ruling means more than $700 million a year in increased tax revenues for the state, according to estimates.

But it's a big blow to city smokers who save more than $4 a pack by buying online or ordering from Indian reservations that have tax-exempt status.

The ruling also applies to cigarette sales by telephone and by mail, according to Attorney General Eliot Spitzer.

The decision by a three-judge panel of the 2nd Circuit Court of Appeals overturned a lower court ruling that found a state law unconstitutional.

Cigarette companies, including Brown & Williamson Tobacco, had challenged the 2000 law, saying it discriminates against interstate commerce, restricting access to a product.

But in a 44-page opinion, the appeals court said the state law "does not prohibit New York consumers' access to cigarettes ... it merely requires that they purchase cigarettes in a manner that allows the seller to verify the buyer's age and to collect the state excise tax."

Double benefit

Gov. Pataki lauded the ruling and said the state law "will play a critical role in our aggressive efforts to prevent minors from purchasing cigarettes," as well as pumping revenue into the strapped state coffers.

The ruling means consumers can buy cigarettes only from licensed dealers who sell taxed cigarettes with the familiar stamp at the bottom of each pack.

"It will help the city and state with their budget problems," said Leonard Schwartz, president of the state tobacco wholesalers association, who estimated the state was losing $1.6 billion a year through Internet sales, cigarette smuggling and other untaxed sales.

Eric Proshansky, a lawyer with the city corporation counsel's office, said that while enforcing the ban could be a problem, law enforcement officers would cruise the Internet to make sure cigarette dealers comply with the law.

[ozone1]

The Supreme Court will be the final say on this I presume. It will be interesting what their 5-4 decision will be.

Still 10 below down here

[Just another Joe]

I say they all start stuffing their own.
Screw the NY tax collectors.
The other way is to buy online outside the country. You really think those outside the country are going to give their customer lists to NY state or NYC?

[montag813]

People are making a killing out-of-state and on eBay. New York will end up losing revenues over this. When you raise taxes too much, Atlas shrugs.

[1Old Pro]

Sounds unenforcable.

It is.

[metesky]

Still 10 below down here

Same here...

[Great Dane]

The ruling means more than $700 million a year in increased tax revenues for the state, according to estimates.

No it doesn't, there are other ways of getting out of being fleezed by the government, the legal one is..... ROLL YOUR OWN... it's the cheapest way I know, mind you if everybody does that, it won't be long before they will raise the tax on loose tobacco equal to that of a carton......... Bastids.

[uglybiker]

I say they all start stuffing their own.
Screw the NY tax collectors.

You got that right!

Then tell 'em the only way a New Yorker can!

Youse lookin' for uh tax stamp?
I gotcha tax stamp right here!

[uglybiker]

See #27

[Max McGarrity]

Well, guess I'm going to have to read up on the Prohibition era in more depth. One thing I know--any law "they" can make, someone will figure a way around it. And folks like Joe Kennedy will get rich off it. (Hmmmmm...allus wondered what it'd be like to be a Kennedy...)

[metesky]

Many are cold, but few are frozen.

[Wolfie]

It's unenforceable except for anecdotal arrests of dealers.

I'd have to disagree. It certainly is unenforceable to the extent that it won't stop cigarette smuggling, but the State and its LEOs now have the opportunity to open up a big ol' can of whoop-ass on smokers. Think arrest, fines, asset seizure. And NY won't even be the first. Washington State will confiscate your car if they catch you bringing in out of state cigarettes. The old canard that "Prohibition doesn't work" is as dead as a doornail. It works fine. Ask any DEA agent.

[MarkL]

How is the state going to enforce it?

Snoop everyone online?

Random snooping?

Sounds unenforcable.

Well, a number of years ago, NY sent some goons to New Jersey shopping malls to take down license plate numbers of NY tagged cars. They received letters informing them that it is illegal to shop out of state in order to avoid paying sales tax (NJ didn't have sales tax on clothing).

Mark

[Glenn]

The old canard that "Prohibition doesn't work" is as dead as a doornail. It works fine. Ask any DEA agent.

What? Does this mean the drug problem in America has been eradicated? When did this happen? Why am I always the last to know?

You're being silly. NY State will try to make a point but the players always play the odds. And the odds are the courts aren't going to deal with nonsense nickel and dime tax cheats.

[Wolfie]

You're missing the point, completely. The stated goal may be to eradicate non-taxed cigarettes, but the realized goal is to cut the State into the profits of smuggling via legal sanctions (ie. fines, asset seizure, etc).

[Glenn]

The stated goal may be to eradicate non-taxed cigarettes, but the realized goal is to cut the State into the profits of smuggling via legal sanctions (ie. fines, asset seizure, etc).

Cigarette smuggling is a very old business in NY. If the realized goal is as you say it is, then it would be have been realized already, don't you think?

[mabelkitty]

If NY cops have that much time on their hands, then they don't need more money from the Federal coffers for homeland security.

[Wolfie]

Sure, but they've just added a whole new category of enforcemnet - internet sales. Think of it as a business gaining a whole new customer base.

[ezo4]

Does anyone know about Yesmoke.com here. Im thinking of trying them out. Im really getting sick of this tax.

[cgbg]

the realized goal is to cut the State into the profits of smuggling via legal sanctions (ie. fines, asset seizure, etc)

There has been some discussion of prohibition here and that is on point.

Outrageous taxes have many second and third order effects. In addition to the direct creation of roganized crime businesses there are others:

(1) Widespread disrespect for the law among otherwise law-abiding citizens.

(2) Significant new corruption among law enforcement officers at all levels.

(3) Encouragement of productive tax-paying and law-abiding citizens to move to lower tax states.

In many of the poorer areas of the state (including the city) many will gladly take the risk of smuggling in out of state cartons for their 'hood'. Alternatively they could set up an out of state PO box and a storage locker in Jersey, order huge quantities by mail or over the internet, and then drive them into the city at their convenience a couple of cartons at a time.

The lawmakers of New York will never see the revenue. What they will see is consequences that will be, at best, slightly negative and at worst, significantly destabiling of what passes for civilization in the Big Apple.

These taxes are stupid, and the politicians who passed them are dangerous to society.

[PBRSTREETGANG]

Gov. Pataki lauded the ruling and said the state law "will play a critical role in our aggressive efforts to prevent minors from purchasing cigarettes," as well as pumping revenue into the strapped state coffers.

Nice to hear our "REPUBLICAN" Governor weigh in on this.