ALBANY, NY - The first six weeks of New York's cigarette tax increase has produced a steep drop in cigarette sales at convenience stores throughout the state, reports the New York Association of Convenience Stores (NYACS).
On July 1, New York raised its cigarette excise tax from $2.75 to $4.35, a 58 percent increase. NYACS notes that as a result, New Yorkers have shifted their purchases to tax-free tribal smoke shops and border states with lower tax rates.
Field reports reveal that New York's convenience stores have suffered a drop of up to 35 percent in cigarette packs sold in July, with retailers in proximity to tribal outlets and state borders experiencing losses of up to 45 percent (meanwhile, sales at Indian reservations and border state retailers have increased as much as 300 percent).
"New York State has now increased its cigarette excise 691% in the past 10 years without closing off readily available channels for dodging that tax," said NYACS President James Calvin. "As a consequence, we're approaching the point where two-thirds of the cigarettes consumed in New York are purchased without collection of any New York State tax whatsoever. Law-abiding stores like ours lose enormous amounts of business, state and local governments lose hundreds of millions in tax revenue, and public health loses because the financial incentive to quit is easily and routinely circumvented. So what did the Governor and Legislature accomplish with this tax hike exactly?"
NYACS is calling on Governor Paterson to follow through on his scheduled September 1 start of tax collection on Native American cigarette sales to non-Indian customers, which the association maintains costs the state $1.5 billion in lost revenue.
Additionally, an August 1 increase in excise taxes on other tobacco products took effect, which has led to New Yorkers purchasing cigars and smokeless tobacco from no-tax or lower-tax venues.
Combined, NYACS said the taxes threaten to cripple many state convenience stores, especially those along state borders and close to Indian reservations.
"It's not just the loss of sales revenue from cigarettes themselves," Calvin said. "It's fewer customers coming through the door to buy cigarettes and other merchandise. For example, many stores have seen a corresponding drop in lottery sales."