N.Y. asks online cigarette buyers to cough up tax

News.com ^ | 1/14/2004 | Reuters

[Zon]

N.Y. asks online cigarette buyers to cough up tax

New York City Mayor Michael Bloomberg said Friday that smokers who bought cigarettes over the Internet had better be prepared to cough up taxes they tried to avoid by going online.

"The law says you got to pay your taxes. The handful of people who don't are just stealing from the rest of us," Bloomberg said in a weekly radio address.

The city's finance department this week sent letters to 3,700 smokers asking them to fork over $1.3 million in city taxes from Internet tobacco purchases. 

The annual loss to the city from online tobacco sales totals $40 million, according to Joanna Perlman, a finance department spokeswoman. Some individuals owed as much as $10,000.

"If you have a bill for $10,000 for cigarette taxes, you're a dealer, you're not just smoking," Bloomberg said.

"The finance commissioner is required by the city charter to enforce the law. It's against the law to buy something out of state and bring it in and avoid sales tax," he said. 

[MarkL]

What if you have a bill for more than $3,500? That's the average amount being asked of the 3700 letter recipients. I don't smoke, but I can't imagine how long it must take to amass such a sum in cigarette taxes. I didn't even know they sold cigarettes over the internet (it makes sense when you consider the tax savings for internet purchases).

I've heard that a pack of cigs in NYC is about $7. That would put the taxes at well over $4 a pack.

Mark

[RikaStrom]

I'm partial to DiscountCigs.com.

Gunner and I use their SkyDancer brand at 13.99 a carton. They taste good, ship promptly, and are big on customer service.

[RandallFlagg]

What's funny is all the, "Good! You should quit smoking anyway!" types don't understand that it has nothing to do with cigarettes. Cigarettes are just the begining to more intrusive avenues of abuse to taxpaying Americans; whether they smoke or not.

Those folks should actually be thanking us smokers. WE are the trial "Lab Rat," for their little experiment called, "How can we screw them today?" rather than them. I don't mind it, but they'd better remember: they will be next.

[MarkL]

The day when smokers finally figure out that they can grow their own tobacco...just the same way they "might" grown marijuana in the loft of their house...this entire tax game will end. I've only met two individuals over the past 20 years that figured this out and grew their own smokes. If everyone would realize this...they could save themselves thousands of dollars over a lifetime...and even cut out the rich cigarette companies as well.

The funny thing is, growing your own tobacco is actually "MORE" illegal that growing marijuana! You're going to be violating more statutes and laws by growing tobacco! The federal government specifies exactly how much land registered tobacco farmers are allowed to plant.

I've got a cousin who used to work for the Dept of Agriculture (MO actually has alot of tobacco farms), and it's very tightly regulated. I brought this up once, and we had a very long discussion over it.

It's not like being able to brew your own beer for private consumption. Growing your own tobacco is an illegal activity!

Mark

[SheLion]

“...and it's still the seller's responsibility to collect....”  

This is yet another slap in the face to our constitution.  Amendment XIII, Section 1 states:  “Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist in the United States, or any place subject to their jurisdiction.”  

Requiring that businesses collect sales tax is involuntary servitude.  The amendment doesn’t specify whether or not one gets paid for the “servitude” but I believe it makes the distinction when it addresses both slavery and servitude.  Why are we not adhering to our constitution?

[SheLion]

I don’t understand the concept.  Smokers are using a product that if they didn’t use, the government would make NO money. The government raised the tax to a point where it was more attractive to buy elsewhere than pay the tax.  This is called free exchange of goods and services.  (Free enterprise).  There is no cheating here; this situation allows for no such thing as cheating.  If the price is too high, buy elsewhere.   

These people need to tell the state of New York to go to hell.  From what I understand, it is still illegal to tax internet sales unless the store has a physical location in your state.  When I make internet purchases of other goods there are no taxes unless there is a physical store in Kentucky.  

This is nothing but greed.

[SheLion]

That makes TWO machine injectors sold in less than a month.

Hey! Good for you! :)

[MamaTexan]

How did the auditors get the names, addresses, and purchase records of these smokers? Isn't a person's mail private anymore?

The FBI seized (either one or several) shipments from Switzerland from a company called Yesmoke.com, so the addresses were probably taken from the shipping labels.

I know this because I was one of their regular customers before the government decided to STEAL Americans legally and lawfully purchased merchandise.

If the State of Texas EVER sends me such a notice, I will tell them to SHOVE IT where the sun don't shine!

[RandallFlagg]

I roll my own at about eighty cents a pack.

Sorry, but I still can't get over how little I've been smoking! /amazed rant

[MarkL]

What I want to know is if they're going to go after folks out of state who bought cigs from NY-based companies, like Senecasmokes.com.

Will I be getting a bill?

I think that you're protected from being taxed by the laws against state taxes on Internet taxation.

Mark

[RandallFlagg]

You should contact them and tell them to start fighting back. I just emailed Seneca Smokes and told them the same.

[SheLion]

See why BloomingIdiot is outraged over the loss of cigarette taxes?

New York City Smokers' Contributions to the City/State Economy-2001

There are approximately 1.3 million adult smokers in New York City. Here is what they already pay because they choose to buy a legal product:

Smokers Pay City Excise Taxes
$ 28,800,000
Smokers Pay City Sales Taxes
$ 68,400,000
Smokers Pay State Excise Taxes
$ 399,600,000
Smokers Pay State Sales Taxes
$ 64,800,000
Smokers Pay Tobacco Settlement Payments
$ 306,716,800
Total $ 868,316,800

Smokers'Economic/Tax Profile

Income
Smokers' median income 2000
$35,509
Median Income Smoker State Tax Liability
Annual state income tax liability for a couple
$ 1,386
Annual state income tax liability for a couple with two children
$ 1,250

Smoker Excise Tax/Sales Tax/Tobacco Settlement Payment Liability

Total average paid per New York City smoker in excise/sales taxes
$ 428
Cost per New York City smoker for settlement payments to New York
$ 234
Total annual payment per New York City smoker
$ 662

New York City Smoker Facts

New York City smoker payments of $868.3 million are equal to the following FY2002 budget amounts:

64% of the general corporation tax collected by the city 25% of general sales revenue
20% of New York City's personal income tax revenue

New York City smoker payments could fund the FY2002 budgets of:

The Department of Homeless Services ($548.8 million)
The New York, Queens, and Brooklyn libraries ($105.8 million)
The Department of Mental Health ($663.1 million)
Department of Youth and Community Development ($165 million)

The City University ($478.6 million)

CIGARETTES DON'T PAY TAXES - NEW YORK CITY SMOKERS DO!!

New York City Data Sources

Number of smokers (1,310,690)= Census Bureau 2000 New York City 18+ population (6,068,009) multiplied by CDC's 2000 percent of adults who are smokers in New York (21.6%).

Total packs sold in New York City = 360,000,000 (Orzechowski & Walker Tax Burden On Tobacco 2001 from New York City Department of Revenue). Derived by dividing New York City excise tax revenue by the excise tax rate per pack ($.08).

Total packs sold in New York = 890,100,000 (Orzechowski & Walker Tax Burden On Tobacco 2001 from New York Department of Revenue). Derived by dividing New York excise tax revenue by the excise tax rate per pack ($1.11).

New York City excise tax revenues = Orzechowski & Walker Tax Burden On Tobacco 2001 from New York City Department of Revenue.

New York City sales taxes = packs sold in New York City multiplied by sales tax rate (4.25% or $.19 per pack).

New York excise taxes = packs sold in New York City multiplied by state excise tax rate ($1.11 in 2001).

New York sales taxes = packs sold in New York City multiplied by sales tax rate (4% or $.18 per pack)

Tobacco Settlement Payments = [(Packs sold in New York City divided by packs sold in New York state) multiplied by settlement payments to New York state ($759.2 million in 2001 per Campaign for Tobacco Free Kids)].

Smokers' median income per CDC's Behavioral Risk Factor Surveillance System 2000, public use data.

Annual state income tax liability from PayBreeze software of General Programming, Inc., San Jose, California, which utilizes the Exact Calculation Method.

Total paid per New York City smoker excise & sales taxes = total excise and sales taxes paid ($561,600,000) divided by number of smokers (1,310,690)

Total paid per smoker for settlement payments to New York= New York City smokers' share of settlement payments to New York ($306,716,800) divided by number of New York City smokers (1,310,690).

New York City smoker facts from the city of New York, Executive Budget Fiscal Year 2003: Expense Revenue Contract, Online at

 

http://www.nyc.gov/html/omb/pdf/erc4_02a.pdf

and
http://www.nyc.gov/html/omb/pdf/erc4_02b.pdf

[MamaTexan]

My seeds are in their warm little beds just waiting to sprout!

A company called Plantation House (http://www.coffinails.com) based in the UK sells them.

Hell, tobacco was commonly grown in the streets of Jamestown and used for money in most of colonial America!

[RandallFlagg]

Growing your own tobacco is an illegal activity!

Is that nationwide? I heard that you can grow it, but not sell it.
THAT would be a property rights case I'd love to see!

[SheLion]

I've heard that a pack of cigs in NYC is about $7. That would put the taxes at well over $4 a pack.

[MamaTexan]

I believe that in order to grow tobacco, you have to have a permit for it,

No, it's just like making wine or brewing beer for personal consumption.

[RandallFlagg]

I read on another forum about problems with yesmoke. Do you know what that was all about?

[MamaTexan]

"If you have a bill for $10,000 for cigarette taxes, you're a dealer, you're not just smoking," Bloomberg said.

And if you get a salary from the city of New York and use you position to prostitute the law, YOU are a PIMP!

[RandallFlagg]

My seeds are in their warm little beds just waiting to sprout!

You and me need to talk. I may need tips about this from ya.

[MarkL]

I roll my own at about eighty cents a pack.

Sorry, but I still can't get over how little I've been smoking! /amazed rant

Funny, that's what I did when I wanted to quit smoking, although I didn't have a machine. I bought some rolling papers, and a pouch of "Bull Durham" tobacco, and proceeded to make really bad, handrolled cigarettes. This was many years ago. I finally gave up, and started chewing tobacco. I was playing a pickup game of softball one evening, and running after a fly ball, I tripped, fell, and swallowed a big chaw of Redman! After two straight days of projectile vomiting, I've never felt to urge to consume any tobacco products since!

Maybe I should market this as a way to quit smoking... I could make lots of money! lol

Mark