N.Y. to Begin Internet Tobacco Sales Ban

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N.Y. to Begin Internet Tobacco Sales Ban

ALBANY. N.Y. -- The state will start enforcing a ban on Internet cigarette sales Wednesday, hoping to capture hundreds of millions of dollars a year in lost tax revenue.

The ban is aimed at tax-free Internet retailers on American Indian reservations that have long eluded the state's reach. But many smokers hope the effort fails. "We're almost optimistic that they can't enforce it," said Audrey Silk, founder of New York City's smoker-rights group NYC CLASH.

United Parcel Service promises to abide by the ban. But even if tobacco-carrying trucking firms are stopped, the retailers can ship by mail, reports the Associated Press.

"The main beneficiary is going to be the U.S. Postal Service," said Ali Davoudi, president of the Online Tobacco Retailers Association.

Mailing costs about 40 percent more than the $2.75 charged by UPS to deliver a carton of cigarettes, Davoudi said, but his association will follow the law while suing the state over the ban. "The states really can't prevent us from accepting and delivering items that are legal to mail," said Gerry Kreienkamp of the U.S. Postal Service.

In cases in which the mail is used, the state will focus on the shipper, said spokesman Tom Bergin of the state Taxation and Finance Department, the report said. After repeated and steep increases in state and local cigarette taxes, a carton of Marlboros that sells for $28 to $32 online can sell for $75 in New York City, according to the Online Tobacco Retailers Association. Overseas firms charge as little as $10 a carton for other brands.

Dan Finkle, a distributor to convenience stores and leader of the Fair Application of Cigarette Taxes group, said his distribution business dropped 40 percent -- 20,000 cartons a week at a $500,000 annual loss -- over the last three years because taxes drove smokers to Internet purchases. He said the losses forced a layoff of 25 people from his 170-person work force.

Bergin said state law allows cigarettes to be shipped only to licensed retailers and wholesalers, not to individuals who buy through the Internet or by mail order. The state will first target trucking and parcel delivery firms, then try to work back to the retailers.