Not All New York Retailers Sour about Cigarette Tax Hike

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Not All New York Retailers Sour about Cigarette Tax Hike

ALBANY -- With the passage of an aggressive tax law, New York will soon hold the distinction of selling the most expensive cigarettes in the nation.

The law, which goes into effect this June, will raise the tax rate to $1.25 per pack. And while this decision has smokers and business owners crying foul, the Seneca Nation tobacco merchants will profit.

On the Senecas' Cattaraugus territory, a carton of Marlboro cigarettes sells for approximately $28, while lesser-known brands sell for a mere $11 per carton, reported The Buffalo News. By contrast, at a CVS location in downtown Buffalo, a carton of Marlboro costs $42.70.

"Customers are going to go elsewhere because government has artificially raised the price of the product, and we don't have a level playing field," Dan Shanahan, chief financial officer of Wilson Farms, a 196- store upstate convenience store chain, told The Buffalo News.

To date, it's estimated that a third of New York smokers purchase their tobacco tax-free from retailers, including Indian, and this new law will significantly increase that statistic. "There's no question the extra $1.25 is going to send smokers to Indian outlets," Assemblyman William Magee (D-Nelson), told The Buffalo News.

While a half-dozen Indian tribes in New York sell tax-free cigarettes, the Seneca Nation is considered the tax-free tobacco market leader. The Seneca's distribute through online sites and independently owned smoke shops. Their supply also feeds New York City, which will adds another $1.50 per pack in local taxes on top of the new $2.75 state tax, bringing the total excise tax there to $42.50 per carton, reported the newspaper.

In a written statement, Seneca Nation President Maurice A. John Sr. downplayed the tax increase's impact on Seneca merchants' finances, noting that cigarette sales are "not overly significant" to the tribe's diverse economy.

"It would be erroneous for anyone to think that this tax increase is some sort of windfall for Indian nations," the statement read. "Due to our sovereignty, the state's tax burden on its residents does not affect us."

As lawmakers and business owners fight over pending legislation, health groups support the tax law; however, health lobbyists concede that cigarette tax-evasion issues will magnify.

"My concern is that, obviously, New York's high taxes have encouraged a lot of tax avoidance. More taxes will encourage more tax avoidance, and we think, from a public health point of view, that is unfortunate," Russell Sciandra, director of the Center for a Tobacco Free New York told The Buffalo News.