Posted on 07/31/2002 7:51:30 PM PDT by RCW2001
Internet Smoke Shops Lure Tax-Averse Cigarette Buyers
By HARLAN SPECTOR
c.2002 Newhouse News Service
As state after cash-strapped state slaps hefty tax increases on cigarettes, smokers are flocking to Internet sites where they can buy tax-free.
Hundreds of Internet smoke shops have come online in recent years, offering a vast selection of premium and discount brands and the enticement of tax-free smoking.
Anti-tobacco activists complain that Internet vendors are unregulated, making it easy for kids to buy online.
Meanwhile, some states are looking for ways to collect the excise taxes cigarette smokers are dodging. Massachusetts and other states have sought customer names from Internet vendors, but they have little leverage to force the issue.
The Ohio Department of Taxation asks a handful of out-of-state vendors for customer lists every year.
"We haven't had very good response," says department spokesman Gary Gudmundson.
"None of these (vendors) report," says Gary Kirschner, chief executive of eSmokes.com. Kirschner says his Internet smoke shop now has 450 competitors online, compared with 30 when his company started in 1999.
"Eighty percent are Indian reservations," he says. "They never report anything to anybody." Sales of cigarettes on Indian reservations are exempt from state and local taxes by law.
Demand is greatest from high-tax states like New York and New Jersey, which levy the nation's highest smoking tax -- $1.50 per pack.
Kirschner says eSmokes also is seeing a jump in customers from Pennsylvania, which raised its tax to $1 a pack on July 15.
New York tried to outlaw Internet and mail-order cigarette sales, but a federal judge struck down the provision last year.
Rep. Martin Meehan, D-Mass., is drafting legislation in Congress to prohibit Internet sales to minors and require that cyberstores be licensed in every state in which they do business.
Age verification at dirtcheapcig.com is typical of Web vendors: "Click here to enter only if your (sic) are 18 or older".
Dr. Rob Crane, a Columbus, Ohio, family physician and anti-smoking activist, says Internet sales threaten efforts to reduce smoking rates with higher taxes.
"It ought to be illegal to sell across state borders," says Crane, who is also part of a campaign to raise the smoking age to 21.
The 55-cent-per-pack tax in his state, where adult and teen smoking rates are among the highest in the nation, may not be enough to drive large numbers of smokers to Internet vendors. Shipping charges keep Internet prices in the ballpark with brick-and-mortar retailers.
Tobacco dealers dispute evidence that higher taxes discourage smoking. They say the tax burden only shifts dependence to low-cost brands and out-of-state vendors.
"It's not people giving up the habit," says Joshua Sanders of the Ohio Council of Retail Merchants.
"They're just going somewhere else."
(Harlan Spector is a reporter for The Plain Dealer of Cleveland. He can be contacted at hspector@plaind.com.)
Smoke 'em if you got 'em!
$9.50
x5
_____
$47.50
+$7.50 delivery
______
$55.00
$1.10 a pack! Welcome to the eighties.
Yeah, I can just picture some tax official from Ohio asking an Indian reservation, "Could we have a list of your customers?"
And the Indian reservation guy replies, "What's this 'We', Kemosabe?"
It ought to be illegal to be a doctor in the USA without having a working knowledge of the US Constitution.
And the Indian reservation guy replies, "What's this 'We', Kemosabe?"
"We're from the government and we're here to help."
I wonder how far back in time/history that phrase originates.
LOL
Something tells me the Indians have heard that line before. :)
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