Nallen: Sale of untaxed cigarettes hurts honest retailers
When the City Council recently proposed raising the age for buying cigarettes to 21 and restricting retail displays of cigarettes, less attention was paid to a third proposal -- the Sensible Tobacco Enforcement bill. It would crack down on trafficking in untaxed cigarettes and unlicensed tobacco sellers, as well as tobacco-company discounts aimed at luring new smokers.
Even though it hasn't received much attention, it might be the most important. It certainly is to me.
For 34 years, my family has run a deli in the Woodlawn section of the Bronx. We have always prided ourselves on doing the right thing -- and that includes complying with tobacco laws.
Too many of our competitors are not so scrupulous, paying as little as $30 for a carton of untaxed cigarettes and selling them for $9 a pack. That's $60-per-carton profit going directly into the retailer's pocket, with New York state and city taxes evaded. The city's Department of Finance estimates almost half of the cigarette retailers in the five boroughs sell untaxed smokes.
My law-abiding parents pay $112 for a carton of cigarettes and sell them for $11.50 per pack. We make $3 total selling a carton of cigarettes. Five to seven years ago, when our cigarette prices were on par with neighboring stores, we sold 150-200 cartons' worth of cigarette packs a week. We now sell eight cartons a week.
And now we learned that investigators are looking into whether proceeds from smuggling tax-free cigarettes into New York are going to people linked to Middle East terrorism, according to an investigation by Attorney General Eric Schneiderman and the NYPD.
Our business has never been based on cigarettes, but on our reputation, relationship with customers and the quality products we deliver. But when customers go into that other store to save $3 on a pack of cigarettes, they also buy a loaf of bread and a gallon of milk. We can't continue to operate in this environment.
Throughout the city, stores that play by the rules are being ruined by criminal operations selling illegal cigarettes. Businesses lose, neighborhoods lose, and the city and state lose an exponential amount of tax revenue. All we are looking for is a level playing field.