NYACS Scores a Victory Against Tobacco Tax Hikes

ALBANY, N.Y. -- Tobacco products have dodged a bullet in the upcoming New York State budget. In reaching an agreement on the proposed 2012-2013 plan, Gov. Andrew Cuomo and state legislature leaders removed potential tax increases on cigars and loose tobacco.

Cuomo proposed the changes to the tobacco levies in January. At that time, the governor called for cigars to be taxed at 50 percent of the retail value, with the wholesale distributor pre-paying a portion of that tax (20 cents per cigar) and the retailer remitting the balance -- meaning another tax reconciliation to perform and another tax return to file, periodically. Currently, cigars are taxed at 75 percent of the wholesale value.

Cuomo also wanted to change the state tax rate on loose tobacco from 75 percent of the wholesale price to $4.53 per ounce, effectively bringing it in line with the tax on a pack of cigarettes, as CSNews Online previously reported.

However, the New York Association of Convenience Stores (NYACS) opposed the proposals, bringing its fight to the finance committees of the state legislatures in early February.NYACS argued that the tobacco tax increases would push consumers to the Native American reservations in the state, to neighboring states with lower taxes or to the black market. As a result, convenience stores would lose business and the state would lose tax revenue, the association contended.

NYACS President Jim Calvin attributed the win to the involvement of its board of directors and legislative committee, and the work done by its lobbyist, Scott Wexler of Ostroff Hiffa & Associates, and its legislative counsel, Doug Kantor of Steptoe & Johnson.

Aside from the tobacco tax increases, the state Senate also had proposed increasing the handling fee paid by retail stores to their cigarette wholesale "stamping agent" from the current two cents per pack to 14 cents, giving wholesalers a 600-percent increase without providing any markup increase for retailers, according to NYACS. The measure was ultimately rejected as a budget inclusion, but could gain new life as a standalone bill in the coming weeks, the association said.

The state Senate also continues to debate proposed changes to the state's Bottle Bill, including provisions allowing distributors to pick up empties less frequently than they are currently required to, and imposing unnecessary costs on retailers who use reverse vending machines, NYACS noted. The association protested and these changes were removed. However, possible Bottle Bill revisions continue to be debated, and could result in a standalone legislation as well.