Marlboro cigarettes news

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 offer 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 that cigarette smokers are dodging. Massachusetts and other states have sought customer names from Internet vendors, but they have little leverage to force the issue."None of these (vendors) report," said Gary Kirschner, chief executive of eSmokes.com. He said his Internet smoke shop has 450 online competitors, compared with 30 when his company started in 1999.
"Eighty percent are Indian reservations," he said. Sales of cigarettes on Indian reservations are exempt from state and local taxes by law.
Demand is greatest from high-tax states such as New York and New Jersey, which levy the nation's highest smoking tax $1.50 per pack.
New York tried to outlaw Internet and mail-order cigarette sales, but a federal judge struck down the provision last year.Martin Meehan, D-Mass., meanwhile, is drafting legislation to prohibit Internet sales to minors and require that cyberstores be licensed in every state in which they do business.
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," said Joshua Sanders of the Ohio Council of Retail Merchants. "They're just going somewhere else."
A major source of revenues in the Legislature's version of the 2003-04 state budget is a renewed effort to collect state taxes on sales of motor fuel and cigarettes on Indian land to non-Indians.The $93 billion spending plan now before Gov. George Pataki anticipates $186 million from the Indian sales to grow to $374 million in future years.State Assemblyman Chris Ortloff, a Plattsburgh Republican, noted that the state has tried unsuccessfully for years to collect the Indian taxes, despite rulings in non-Indian courts that the state is entitled to the money. The state's Indian nations regard themselves as sovereign and not subject to those rulings."We haven't the ability _ we haven't the time to sustain continued court challenges," Ortloff said. "We haven't the guts to challenge Indian sovereignty."Ortloff added that "we have no reasonable expectation of ever collecting a cent" of the taxes on transactions on Indian land to non-Indians.

Even before the Legislature's budget bills were headed to Pataki's desk for possible vetoes, tribal officials and vendors were gearing up to fight the latest state attempt totax their transactions.Seneca Nation of Indians President Rickey Armstrong Sr. said that ultimately, he believed "New York state's elected leaders won't make a decision that infringes on the right of Indian nations to self govern on any issues, including commerce." Back in April, leaders of the Seneca, Mohawk, Oneida and Cayuga nations re-established an Iroquois Tax Coalition to fight state attempts to tax tribal commerce.Indian merchants were no more receptive to renewed state interest in taxing their transactions than their tribal leaders are.Neville Spring, owner of "The Rez" on the Tonawanda reserve near Buffalo, contended that "New York state is using Indians as scapegoats" to help cover New York's $12 billion revenue shortfall."I'm not going to sit here and collect taxes for New York state," said Wilie Parry, owner of Wolf's Run on the Seneca's Cattaraugus Reservation in Irving. "I think they're going to end up with worse problems than they did in '97."Pataki's skepticism at the prospects of collecting the Indian taxes is borne of experience. His administration tried to tax Indian tobacco and motor fuel sales in his first three years as governor, only to encounter stiff resistance and the threat of violence. He quietly dropped the effort in 1997.State Assemblywoman Nancy Calhoun, an Orange County Republican, noted that the most recent attempt to collect Indian taxes in New York resulted in a "tremendous outbreak of war and opposition."Still, non-Indian merchants have continued to push the collection of Indian taxes as an issue of fairness. Because they are not charging state taxes on their transactions, Indian vendors can sell cigarettes at $15-$20 less per carton and gasoline at 5 cents-20 cents less per gallon than nearby non-Indian businessmen, said

"The stores that dutifully collect the taxes have suffered the ill effects of tax evasion for years," Calvin said. "They have never asked for preferential treatment, just a chance to compete fairly for retail trade. That's what this would do _ it would restore a level playing field."Calvin conceded that it would not be easy to collect the taxes, but said there are ways it could be done. Most think the best chance the state has is to force Indian merchants to pay taxes at the wholesale level, when they receive cigarettes or gasoline from suppliers.Anti-smoking advocates have joined the debate over the issue, arguing that cut-rate Indian cigarette sales run counter to the state's policy of heaping taxes on cigarettes to discourage tobacco use."I'm told that in some upstate counties half the cigarettes sold come off Indian reservations," said the American Cancer Society's Peter Slocum. "If you believe that higher prices have an impact on smoking rates, we are losing that effect."