Posted on 08/12/2002 5:53:56 PM PDT by John W
BOSTON (AP) - States are losing millions in tax dollars as more people buy cigarettes from online vendors who routinely ignore a federal law requiring them to report sales to local regulators, a new report says. The trend could undercut efforts by cash-strapped states to raise revenues by hiking cigarette taxes. In Massachusetts lawmakers recently approved a 75-cent hike on a pack of cigarettes, a move officials hope will bring in an extra $190 million annually. In Illinois, the state boosted cigarette taxes by 40 cents to a total of 98 cents a pack.
New Jersey and New York state both have a $1.50 per pack tax, the nation's highest. Washington state is third, at $1.425.
Federal law requires Internet cigarette sellers to provide state revenue officials with names and addresses of their customers. The officials can then pursue the buyers to make sure they pay local sales taxes.
But Internet cigarette vendors openly flout the law, known as the Jenkins Act, according to a report by the U.S. General Accounting Office to be released Tuesday.
"Our Internet search efforts identified 147 Web site addresses for Internet cigarette vendors based in the United States. None of the Web sites posted information that indicated the vendors complied with the Jenkins Act," the report said.
In fact, according to the report, 78 percent of the sites indicated that the vendors do not comply with the law.
The report recommends shifting primary enforcement of the law from the Federal Bureau of Investigations to the Bureau of Alcohol, Tobacco and Firearms, in part because of the FBI's heightened focus on terrorism.
Calls to several Internet cigarette vendors advertising "tax free cigarettes" were not returned to The Associated Press on Monday. One Web site told buyers "We do not report to tax authorities in ANY state. 100% confidential."
The cost to states can run into the millions, according to the report.
Officials in California estimated a tax loss of approximately $13 million from May, 1999 through September, 2001 because of the failure of Internet cigarette vendors to comply with the federal law.
By 2005, Internet tobacco sales in the United States could exceed $5 billion and states could lose about $1.4 billion in revenues, according to the report.
U.S. Rep. Martin Meehan, D-Mass., requested the report, which he said reveals a burgeoning market of online cigarette sales.
The lack of oversight lets children illegally purchase cigarettes online, said Meehan, who plans to file a bill requiring Internet cigarette shops to verify the age, address and identity of purchasers before shipping tobacco products.
INDIANA SMOKERS' CONTRIBUTIONS TO THE STATE ECONOMY - 2001
California Smokers'Contribution To The State Economy -2001
MICHIGAN SMOKERS' CONTRIBUTION TO THE STATE ECONOMY - 2001
ILLINOIS SMOKERS’ CONTRIBUTIONS TO THE STATE ECONOMY - 2001
MASSACHUSETTS SMOKERS' CONTRIBUTIONS TO THE STATE ECONOMY-2001
This is absolute BS! What parent in their right mind will give a credit card to a kid to buy cigarettes over the net!
This is inaccurate, deceitful and dishonest information they are spewing! As for losing the honey pot for the state coffers: TOUGH CHIT! It was their own fault they taxed us to high heaven, then turned around and banned and try to control us. They can't have both.
I just want to SLAP anyone who makes that asinine statement. We smokers pay MORE then our fair share for health insurance! And most of us HAVE our own health insurance, thank you!
The Tobacco Settlement Money was supposed to pay for any sick smoker who HAD no health insurance, should there be any. But oh no! The states had to buy new roads and lap tops and all the little pet programs for the DemocRATS!
Don't tell me! I have studied this in it's entirety!
GOOD! That's what they get for thinking they could balance their budgets on the backs of smokers.
The Reservations are Soverign States:
Read Their Lips: No Taxes/New York
On a June day, customers streamed into Chief Wallace's shop, a small pine-paneled store with walls of cigarettes and cases displaying Indian-made jewelry and moccasins. Cars filled the small parking area and newcomers had to park by the bushes or down the road. Yet exactly how thriving these businesses are is unclear, because the shop owners — who seem to feel vilified by just about everyone except their loyal customers — are unwilling to say.
When asked how many cartons of cigarettes he sells per month, Chief Wallace, a stocky man wearing two braids, denim shorts and flip-flops, responded, "It's none of your business."
So one could explore the economics this way: A reporter watched seven cartons of cigarettes being sold inside Chief Wallace's shop in five minutes one day in June. Erring on the side of caution, then, one could assume 50 cartons are sold an hour. The shop is open 13.5 hours a day every day, which translates to 675 cartons a day, 4,725 cartons per week, or 18,900 per month. (And that does not include phone and Internet orders.) At an average price of $27.50 per carton, Chief Wallace would take in about $520,000.
Chief Wallace shrugged and lighted another cigarette. "If they're so bad, make them illegal," he said. "In the meantime, leave me alone."
That's right. The tobacco taxes and lawsuit awards were supposed to offset the big bucks these sick diseased smokers are costing the rest of society.
Like you I'm still waiting for my tax cut.
Where's all the money going?
It's wonderful, Rika!
OUCH! Sorry, martin! ~whew, I sure am touchy about this subject! Can't say I don't believe in what I am fighting for! Forgive me?
But it's your nature. <|:)~ 'pology 'cepted.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.