NYACS: Lost Taxes Cost New York $600M

Press enter to search
Close search
Open Menu

NYACS: Lost Taxes Cost New York $600M

ALBANY -- The amount of money that New York state has lost due to cigarette tax evasion -- including the failure of the government to collect taxes from Native American retailers' sales of tobacco -- climbed to more than $1.6 million per day in lost tax revenue, according to a new economic analysis conducted for the New York Association of Convenience Stores (NYACS) by economist Brian P. O'Connor, Ph. D., an economic consultant, policy analyst and former director of U.S. economics for IBM Corp., the association stated.

If the administration of Gov. Eliot Spitzer enforced the collection of taxes on Native American sales of cigarettes to non-Native American customers, new state revenue would range from $575 million to $625 million per year, according to the study, called "An Update: Additional Cigarette Tax Revenue Sources For New York State."

The new study found that the impact of Native American tobacco sales to non-Native American was nearly 40 percent more than the results seen in O'Connor's original cigarette tax loss study, performed in 2002 for the Fair Application of Cigarette Tax (FACT) Alliance, according to the association, which attributed the difference to an increase in Native American's market share when large hikes in cigarette excise tax rates by New York state and New York City were enacted in early 2002 and other state and city governments in recent years.

"This confirms that New York's cigarette tax evasion epidemic is spreading," James Calvin, president of NYACS, said in a statement. "While the Spitzer administration fiddles, the state continues to lose more than $1.6 million in legitimate tax revenue every day."

"Given the alarming magnitude of cigarette tax evasion, this is no time to be talking about increasing New York’s cigarette tax rate," Calvin pointed out. Anti-smoking groups last week recommended doubling the tax to $3.00 per pack statewide, and some state leaders have seemed open to the possibility.

"As long as the Spitzer administration turns a blind eye to cigarette tax evasion, any attempt to raise more money with a higher tax rate will be utterly self-defeating," he said. "It would only drive thousands more smokers into the arms of unlicensed, unregulated, untaxed outlets -- and destroy what's left of New York's law-abiding convenience store industry."