A gathering of elected officials sought to add pressure on Governor Paterson to begin collecting taxes for cigarettes sold to non-American Indians on reservations. The best line on the issue, which is sure to ignite strong resistance from the Seneca, came from state Senator Carl Kruger as he distilled the reticence to act on the issue down to this:
"Statements that came out of the executive were things like, 'We don't want to collect the tax for fear that we will shed a drop of blood. Well you know what, when an attempt was made, which lasted about 10 minutes, to collect the tax, some folks went out on a road and set some tires on fire. So everybody took a quick retreat, and the taxpayers of the state of New York lost billions of dollars."
He was referring to the road blockades installed by the Seneca tribe, which has resisted the taxation for years, saying it is unconstitutional and violates their sovereignty. The tribe has blocked the New York State Thruway, which runs through their land, in the face of taxation, resulting in battles with the State Police.
Mr. Kruger wasn't sympathetic:
"I don't know one homeowner on Long Island or Nassau or Westchester County that wouldn't go out on the Sprain Brook or the Long Island Expressway and burn some tires if they didn't have to pay their property tax. And if they attempted to do it, they would be arrested.
The highly controversial issue is one the governor now supports, although he has not included any expected revenues in the budget, so it's unclear just how committed he is to fighting to collect the taxes. (Lobbyist Richard Lipsky, who organized the event, said the governor had made a "rhetorical shift.") The electeds at the event, including state Senators Jeff Klein, Pedro Espada and Joseph Addabbo along with Assemblyman Richard Brodsky, were pressuring the governor to begin the legal steps needed to start collecting the tax as the budget season gets underway.
Jan 29, 2010
Jan 27, 2010
Boost in Md. cigarette taxes a boon for smugglers
Gov. Martin O'Malley promotes entrepreneurship. Kyun Hong seems to have answered the call.
According to comptroller's agents, he packed his Severna Park house with cigarettes and snuff bought across state lines and resold them to Baltimore retailers without paying Maryland's tobacco tax.
If he is a tobacco smuggler - he hasn't been convicted and didn't respond to a detailed message left at his house - he has competition. The doubling of Maryland's cigarette tax two years ago has inspired uncounted numbers of small businessmen to do what comes naturally: Buy low and sell high.
Nowhere else in the country do smugglers need to drive so short a distance to make so much money. Thanks to the abyss between Maryland's cigarette tax and those of its neighbors, a pop across the Potomac for a van-full of smokes can easily net $5,000, even if you split the profits with the Maryland stores that buy them.
Lawmakers hoped to increase revenue and discourage smoking when it raised the tax. But it also seems to have energized the Maryland underworld and increased crime. The tax increase has delivered benefits, but its costs are rising, too.
Tobacco-smuggling busts roughly tripled in the first fiscal year after Maryland's tax went from $1 to $2 a pack. They're on track to equal those levels again this year, but traffickers nailed by tobacco-enforcement agents are probably only a teeny portion of what goes on.
Maryland may be No. 1 in the country in cigarette smuggling, according to calculations by Michigan's Mackinac Center for Public Policy, a pro-markets think tank.
Hard data on smuggling are nonexistent because so much is undetected. But Mackinac researchers compared legal cigarette sales with each state's actual level of smoking as shown by federal health surveys. The difference was probably smuggling.
They also accounted for tax increases and the proximity of low-tax states to project how higher taxes would boost smuggling. With next-door Virginia taxing smokes at only 30 cents a pack, the Mackinac center calculates, as many as half of all cigarettes consumed in Maryland these days are illegal.
People who supported the tax increase cheer what looks like an amazing plunge in Maryland smoking. But they're looking only at official figures.
"This shows that the dollar tax increase did exactly what public health advocates predicted," Vincent DeMarco, president of the Maryland Citizens' Health Initiative, said a few months ago.
Come on, Vinny. Legal sales have plunged because smokers and smugglers save $17 a carton by driving south and loading up the trunk.
The $2 tax has surely dissuaded some teens from starting to smoke, and for that reason alone, it can be defended. But the 18 percent drop in official cigarette sales that took place after the tax increase does not mean Maryland went on a health binge. Nationally, cigarette sales have been declining by 2 percent or 3 percent per year.
Meanwhile Maryland is nurturing another thriving, illegal industry. Enforcement agents seized $140,000 in illegal tobacco from Hong's house, said Jeff Kelly, director of field enforcement for Comptroller Peter Franchot.
"It was just piled up," he said. "It formed its own hallway. It was hard to get around."
Officials also got what might have been a good look at Hong's distribution system - a list of 54 Baltimore shops that they took to be customers or potential customers. That gives an idea of how pervasive illegal sales may be.
As of Tuesday, Franchot's people had visited most of the stores and busted half a dozen for having untaxed tobacco.
Tobacco smuggling isn't as violent as drug smuggling, but wait: According to Kelly, some dealers are switching from heroin and cocaine to tobacco because it's easier and just as lucrative. Sometimes law-enforcement officials report links between tobacco traffickers and terrorists.
These entrepreneurs aren't doing Maryland any good. Kelly's office has fewer than two dozen people to stop tobacco smuggling. The same folks have to track liquor and gasoline sales, too.
Last week, I wrote a column supporting an increase in Maryland alcohol taxes, so maybe you're wondering about the apparent flip-flop. But Maryland's booze taxes are way below those of its neighbors, and alcohol is harder to smuggle.
Like all politics, taxes are the art of the possible. The cigarette-smuggling boom shows yet again that policies have side effects, and Maryland does not operate in a smoke-free vacuum.
According to comptroller's agents, he packed his Severna Park house with cigarettes and snuff bought across state lines and resold them to Baltimore retailers without paying Maryland's tobacco tax.
If he is a tobacco smuggler - he hasn't been convicted and didn't respond to a detailed message left at his house - he has competition. The doubling of Maryland's cigarette tax two years ago has inspired uncounted numbers of small businessmen to do what comes naturally: Buy low and sell high.
Nowhere else in the country do smugglers need to drive so short a distance to make so much money. Thanks to the abyss between Maryland's cigarette tax and those of its neighbors, a pop across the Potomac for a van-full of smokes can easily net $5,000, even if you split the profits with the Maryland stores that buy them.
Lawmakers hoped to increase revenue and discourage smoking when it raised the tax. But it also seems to have energized the Maryland underworld and increased crime. The tax increase has delivered benefits, but its costs are rising, too.
Tobacco-smuggling busts roughly tripled in the first fiscal year after Maryland's tax went from $1 to $2 a pack. They're on track to equal those levels again this year, but traffickers nailed by tobacco-enforcement agents are probably only a teeny portion of what goes on.
Maryland may be No. 1 in the country in cigarette smuggling, according to calculations by Michigan's Mackinac Center for Public Policy, a pro-markets think tank.
Hard data on smuggling are nonexistent because so much is undetected. But Mackinac researchers compared legal cigarette sales with each state's actual level of smoking as shown by federal health surveys. The difference was probably smuggling.
They also accounted for tax increases and the proximity of low-tax states to project how higher taxes would boost smuggling. With next-door Virginia taxing smokes at only 30 cents a pack, the Mackinac center calculates, as many as half of all cigarettes consumed in Maryland these days are illegal.
People who supported the tax increase cheer what looks like an amazing plunge in Maryland smoking. But they're looking only at official figures.
"This shows that the dollar tax increase did exactly what public health advocates predicted," Vincent DeMarco, president of the Maryland Citizens' Health Initiative, said a few months ago.
Come on, Vinny. Legal sales have plunged because smokers and smugglers save $17 a carton by driving south and loading up the trunk.
The $2 tax has surely dissuaded some teens from starting to smoke, and for that reason alone, it can be defended. But the 18 percent drop in official cigarette sales that took place after the tax increase does not mean Maryland went on a health binge. Nationally, cigarette sales have been declining by 2 percent or 3 percent per year.
Meanwhile Maryland is nurturing another thriving, illegal industry. Enforcement agents seized $140,000 in illegal tobacco from Hong's house, said Jeff Kelly, director of field enforcement for Comptroller Peter Franchot.
"It was just piled up," he said. "It formed its own hallway. It was hard to get around."
Officials also got what might have been a good look at Hong's distribution system - a list of 54 Baltimore shops that they took to be customers or potential customers. That gives an idea of how pervasive illegal sales may be.
As of Tuesday, Franchot's people had visited most of the stores and busted half a dozen for having untaxed tobacco.
Tobacco smuggling isn't as violent as drug smuggling, but wait: According to Kelly, some dealers are switching from heroin and cocaine to tobacco because it's easier and just as lucrative. Sometimes law-enforcement officials report links between tobacco traffickers and terrorists.
These entrepreneurs aren't doing Maryland any good. Kelly's office has fewer than two dozen people to stop tobacco smuggling. The same folks have to track liquor and gasoline sales, too.
Last week, I wrote a column supporting an increase in Maryland alcohol taxes, so maybe you're wondering about the apparent flip-flop. But Maryland's booze taxes are way below those of its neighbors, and alcohol is harder to smuggle.
Like all politics, taxes are the art of the possible. The cigarette-smuggling boom shows yet again that policies have side effects, and Maryland does not operate in a smoke-free vacuum.
Jan 24, 2010
Why it will take more than D.A.R.E. to ban smoking
Midterms: studying for them is like army boot camp and taking them is like an early summer morning in 1944 Normandy. You know what would be a fantastic way for Northwestern to take care of its students and relieve their never-ending stress? Try rationing out some cigarettes. Thoughts? I mean it worked for the army in World Wars 1 and 2. And let’s face it: midterms in Evanston are pretty rough.
Just think of all the benefits of smoking. It relieves stress, curbs your appetite (so long, freshman 15), and makes you look like a bad-ass (?). Of course, one downside I guess is that it kills you and potentially those around you as well. It’s enough of a downside that President Obama (a former smoker himself) felt it prudent to sign into law last summer a nationwide ban on flavored tobaccos. Relax, hookah is safe.
But how does a ban on tooty-fruity cancer sticks solve anything? The argument is that people start smoking when they’re young. When they’re young, they’re susceptible to things like advertising and fun, appealing flavors and colors (see Pink Elephants). So in addition to a flavor-ban, cigarette advertisements cannot be displayed within 1,000 feet of any school or playground. Smart, sure, but how well does advertising work?
An estimated 1% of cigarette sales come from flavored cigarettes. By the government’s logic, if a pack of flavored cigarettes is appealing once , then kids want to upgrade to regulars because they taste the same? That’s hard to believe. The truth is, it’s not the taste of cigarettes that gets people hooked: smokers don’t care if a cigarette is “toasted” (see Mad Men, season 1).
Most people who grow into a cigarette addiction start smoking at 19 years of age, not playground age. And at 19, people are more influenced by their environment. A peer pressure message may or may not be coming.
Let’s take Northwestern’s campus for example, the D.A.R.E. generation. We all grew up knowing that cigarettes, drugs and alcohol were bad. For plenty of people on this campus, the adverse effects of the latter two haven’t prevented consuming them. In any case, we or one of our friends may have smoked a cigarette just to “try it out”, just to find out what this mysterious 80 millimeters was all about. One thing led to another and we all wanted to try one. Some got hooked, others didn’t and others still grew to get hooked just by being around the hooked ones.
If most people pick up smoking around the age of 19 and if environment seems to be more of a determining factor in picking up smoking than advertising, then the measures our government is taking to reduce the numbers of new smokers aren’t helping out. In fact, these kinds of government regulations only serve up political trouble. As a response to this new law, cigarette companies have taken the federal government to court. Should we really be spending our judicial capital on fighting greedy tobacco companies with these laws that probably won’t matter?
Just imagine if Evanston banned liquor and beer because they hurt the liver and damage the brain (among other things) and cause people to get into drunken accidents or fall out of windows. The state drinking age doesn’t seem to stop NU students from getting wasted and throwing away their $50k educations. That means no more Keg, no more EV1. For that matter, no banners or fliers with beer or liquor references on them either. But wine is fine. Do you really think Northwestern students would settle for Carlo Rossi 24/7 and not find a way to procure Busch or Stoli? Okay, maybe some of us would be fine with Carlo Rossi but most wouldn’t. It’d be just one more law to enforce that doesn’t work.
My point is, if we fight the most convincing introduction to cigarettes (e.g. environmental persuasion) we accomplish two things: the death of its continuation and the death of its appeal. In recent years, state after state has offered a slew of bans that prevent smokers from lighting up in closed public spaces, but that doesn’t stop people from enjoying their coffee and cigarette outside or moving to Texas (which, along with several other states, has no state-wide ban on indoor smoking). And as an economic tangent, just imagine owning the only bar in Chicago that allows smoking indoors? Sounds like cash-money to me, and reason for states not to ban smoking in public establishments for want of new business. But in any case the environment I’m referring to isn’t physical, it’s psychological.
Ernest Dichter, a brilliant psychologist and pioneer of Freudian applications to marketing, had it right back in the day. He basically said that people like to smoke not because they’re told it’s cool by ad-companies, but because of how it makes them feel. He plays up the psychological effects of smoking, how smokers derive happiness from a cigarette break at work, or how it brings people together. It works into your daily routine, it relaxes you, helps you think. In this way, smoking becomes more than just an addiction, it becomes a lifestyle. If smokers quit, they feel like they will lose the perceived benefits of smoking. Because they don’t quit, others want to join in on the fun.
So how do you outlaw peer pressure? How do you outlaw a psyche? Isn’t that the point of Nicorette? To convince people that you don’t need a cigarette to feel good about life? Isn’t that the point of all those public service announcements? Laws are all fine and dandy but outlawing a lifestyle is damn near impossible.
Society has to find a way to replace smoking socially and psychologically, not physically. Though the number of smokers and overall consumption of cigarettes has reduced over time, the incubating environmental niche for new smokers will probably continue to exist in culture and conversation unless people actively seek a change in social mentality by revamping what we teach kids about cigarettes. Instead of just telling kids that smoking is bad, we should be telling them whypeople smoke: it’s not to look cool, it’s for that lifestyle that Dichter describes. Kill the curiosity, and the cat lives. Knowledge of cigarettes helps, but instilling wisdom in our youth goes a lot further.
Instilling this wisdom is a daunting and highly improbable task, but I guess that’s the point. Smoking has always been a cultural, social and psychological phenomenon. It’s a lifestyle, a religion that transcends mere addiction, one that costs our health system billions of dollars a year and one that requires a generation of new thinking, not just laws, to kill.
Just think of all the benefits of smoking. It relieves stress, curbs your appetite (so long, freshman 15), and makes you look like a bad-ass (?). Of course, one downside I guess is that it kills you and potentially those around you as well. It’s enough of a downside that President Obama (a former smoker himself) felt it prudent to sign into law last summer a nationwide ban on flavored tobaccos. Relax, hookah is safe.
But how does a ban on tooty-fruity cancer sticks solve anything? The argument is that people start smoking when they’re young. When they’re young, they’re susceptible to things like advertising and fun, appealing flavors and colors (see Pink Elephants). So in addition to a flavor-ban, cigarette advertisements cannot be displayed within 1,000 feet of any school or playground. Smart, sure, but how well does advertising work?
An estimated 1% of cigarette sales come from flavored cigarettes. By the government’s logic, if a pack of flavored cigarettes is appealing once , then kids want to upgrade to regulars because they taste the same? That’s hard to believe. The truth is, it’s not the taste of cigarettes that gets people hooked: smokers don’t care if a cigarette is “toasted” (see Mad Men, season 1).
Most people who grow into a cigarette addiction start smoking at 19 years of age, not playground age. And at 19, people are more influenced by their environment. A peer pressure message may or may not be coming.
Let’s take Northwestern’s campus for example, the D.A.R.E. generation. We all grew up knowing that cigarettes, drugs and alcohol were bad. For plenty of people on this campus, the adverse effects of the latter two haven’t prevented consuming them. In any case, we or one of our friends may have smoked a cigarette just to “try it out”, just to find out what this mysterious 80 millimeters was all about. One thing led to another and we all wanted to try one. Some got hooked, others didn’t and others still grew to get hooked just by being around the hooked ones.
If most people pick up smoking around the age of 19 and if environment seems to be more of a determining factor in picking up smoking than advertising, then the measures our government is taking to reduce the numbers of new smokers aren’t helping out. In fact, these kinds of government regulations only serve up political trouble. As a response to this new law, cigarette companies have taken the federal government to court. Should we really be spending our judicial capital on fighting greedy tobacco companies with these laws that probably won’t matter?
Just imagine if Evanston banned liquor and beer because they hurt the liver and damage the brain (among other things) and cause people to get into drunken accidents or fall out of windows. The state drinking age doesn’t seem to stop NU students from getting wasted and throwing away their $50k educations. That means no more Keg, no more EV1. For that matter, no banners or fliers with beer or liquor references on them either. But wine is fine. Do you really think Northwestern students would settle for Carlo Rossi 24/7 and not find a way to procure Busch or Stoli? Okay, maybe some of us would be fine with Carlo Rossi but most wouldn’t. It’d be just one more law to enforce that doesn’t work.
My point is, if we fight the most convincing introduction to cigarettes (e.g. environmental persuasion) we accomplish two things: the death of its continuation and the death of its appeal. In recent years, state after state has offered a slew of bans that prevent smokers from lighting up in closed public spaces, but that doesn’t stop people from enjoying their coffee and cigarette outside or moving to Texas (which, along with several other states, has no state-wide ban on indoor smoking). And as an economic tangent, just imagine owning the only bar in Chicago that allows smoking indoors? Sounds like cash-money to me, and reason for states not to ban smoking in public establishments for want of new business. But in any case the environment I’m referring to isn’t physical, it’s psychological.
Ernest Dichter, a brilliant psychologist and pioneer of Freudian applications to marketing, had it right back in the day. He basically said that people like to smoke not because they’re told it’s cool by ad-companies, but because of how it makes them feel. He plays up the psychological effects of smoking, how smokers derive happiness from a cigarette break at work, or how it brings people together. It works into your daily routine, it relaxes you, helps you think. In this way, smoking becomes more than just an addiction, it becomes a lifestyle. If smokers quit, they feel like they will lose the perceived benefits of smoking. Because they don’t quit, others want to join in on the fun.
So how do you outlaw peer pressure? How do you outlaw a psyche? Isn’t that the point of Nicorette? To convince people that you don’t need a cigarette to feel good about life? Isn’t that the point of all those public service announcements? Laws are all fine and dandy but outlawing a lifestyle is damn near impossible.
Society has to find a way to replace smoking socially and psychologically, not physically. Though the number of smokers and overall consumption of cigarettes has reduced over time, the incubating environmental niche for new smokers will probably continue to exist in culture and conversation unless people actively seek a change in social mentality by revamping what we teach kids about cigarettes. Instead of just telling kids that smoking is bad, we should be telling them whypeople smoke: it’s not to look cool, it’s for that lifestyle that Dichter describes. Kill the curiosity, and the cat lives. Knowledge of cigarettes helps, but instilling wisdom in our youth goes a lot further.
Instilling this wisdom is a daunting and highly improbable task, but I guess that’s the point. Smoking has always been a cultural, social and psychological phenomenon. It’s a lifestyle, a religion that transcends mere addiction, one that costs our health system billions of dollars a year and one that requires a generation of new thinking, not just laws, to kill.
Jan 22, 2010
E-cigarettes Harm Health
Experts have claimed that battery-powered e-cigarettes can do more harm than good, as they apparently contain harmful chemicals.
Two leading Greek researchers have advised consumers to stop using the devices until ongoing safety studies are reported back.
The popularity of e-cigarettes has increased as consumers can inhale nicotine without tar, tobacco or carbon monoxide. However, the US Food and Drug Administration has expressed concern after learning different brands delivered markedly varied amounts of nicotine vapour with each puff.
They have detected traces of powerful cancer-causing chemicals too.
Also, private enterprise Health New Zealand has found cancer-causing chemicals in the product.
"The scarce evidence indicates the existence of various toxic and carcinogenic compounds in e-cigarettes, albeit in possibly much smaller concentrations than in traditional cigarettes," the BBC News quoted the researchers as saying.
Meanwhile, a Department of Health spokeswoman insisted the government was working to ensure e-cigarettes were labelled and sold appropriately.
She said: "The Department of Health is not aware of any evidence about the long-term safety of e-cigarettes and, as such, would suggest that consumers exercise caution.
"E-cigarettes are not promoted by, or available on, the NHS."
The study has been published in the British Medical Journal.
Two leading Greek researchers have advised consumers to stop using the devices until ongoing safety studies are reported back.
The popularity of e-cigarettes has increased as consumers can inhale nicotine without tar, tobacco or carbon monoxide. However, the US Food and Drug Administration has expressed concern after learning different brands delivered markedly varied amounts of nicotine vapour with each puff.
They have detected traces of powerful cancer-causing chemicals too.
Also, private enterprise Health New Zealand has found cancer-causing chemicals in the product.
"The scarce evidence indicates the existence of various toxic and carcinogenic compounds in e-cigarettes, albeit in possibly much smaller concentrations than in traditional cigarettes," the BBC News quoted the researchers as saying.
Meanwhile, a Department of Health spokeswoman insisted the government was working to ensure e-cigarettes were labelled and sold appropriately.
She said: "The Department of Health is not aware of any evidence about the long-term safety of e-cigarettes and, as such, would suggest that consumers exercise caution.
"E-cigarettes are not promoted by, or available on, the NHS."
The study has been published in the British Medical Journal.
Jan 21, 2010
Tax agents visit tobacco dealers
Stores throughout Columbiana and Jefferson counties were visited Wednesday by agents with the Ohio Department of Taxation, checking to make sure they are legally selling tobacco products.
As of early afternoon, in this county agents had found one Lisbon store selling cigars that had not been properly taxed, with additional vendors still to be visited.
Agents declined to name that business but confiscated 21 miscellaneous cigars they said had been purchased out of state and without paying Ohio's tax.
"His cigars are looked at as contraband now," according to ODT Supervisor Rich Noss.
The owner "had been buying them for years in New Castle, Pa." and claimed not to know it was illegal, according to the agents.
An investigation will follow, and the store owner could be charged but will almost certainly be assessed for the unpaid taxes, they said.
A number of seizures were made in Jefferson County stores, agents indicated.
Agents checked random samplings of cigarette packages to make sure each carried the proper tax stamp and also checked to make sure the vendor had the proper license, which is renewable annually.
He said, "We see a lot of expired licenses, more in some areas than others," particularly in larger Ohio cities.
For many years, those licenses cost vendors $30 but that fee went up to $125 on Jan. 1, which Noss agreed could result in higher per-pack costs.
Currently, $2.25 of the cost of a pack of cigarettes constitutes state and federal taxes, according to administrative officer Will Ditto. That does not include any sales tax imposed.
"There is a state minimum on the cost to make it equitable statewide so mom and pop has the same playing field as someone like this," Noss said, referring to the local Giant Eagle, which was among the stores visited.
He said vendors can, however, change their markup to pass along the increase to their customers.
At the Giant Eagle, everything was found to be in order, although an agent did notice one brand on which only a tiny portion of the stamp was evident, which will be brought to the wholesaler's attention, since that's where the stamps originate by machine.
Also examined Wednesday were store invoices showing that the proper taxes were paid when purchasing the tobacco products from wholesalers.
Businesses are required to maintain these invoices three years. Noss said, "You have to have these purchase invoices to back up your story."
The agents have police powers and can issue a summons on the spot to those found in violation of the tax laws, with charges ranging from minor misdemeanors to felonies.
Not having the proper license, for example, is a fourth-degree misdemeanor, while purchasing tobacco products in one state and then selling them in Ohio could result in a felony charge.
With Columbiana and Jefferson counties nestled along the river so close to Pennsylvania and West Virginia, where tobacco taxes are less, this type of resale often occurs.
In Ohio, the cigarette tax is $1.25 per pack while in West Virginia it is 55 cents and, in Pennsylvania, just 35 cents. For other tobacco products (OTP), such as cigars or snuff, Ohio's tax is 17 percent and West Virginia's 7 percent, with no tax assessed on OTP in Pennsylvania.
In Ohio, the OTP distributor's license increased from $100 to $1,000 this year.
"You might think you're saving a buck or two by going across the river to buy your cigarettes, but you're violating the law," Noss cautioned.
The threshold at which a misdemeanor becomes a felony is six cartons, according to Noss, who said, "We use discretion; we're not looking for people with six cartons."
Nonetheless, if a person went to West Virginia, purchased six cartons of cigarettes and brought them back to Ohio, even for personal use, he could be charged with a fourth-degree felony.
For the most part, all cigarettes sold in Ohio must be sold in a face-to-face transaction, according to law. This means the sale of cigarettes over the Internet, in catalogues, by phone or mail order or other methods is illegal.
The laws surrounding tobacco taxation are complex, and when a charge is brought against a vendor, the county prosecutors are surprised to learn just what is and isn't legal, according to the ODT agents.
"Even prosecutors have to be educated," agent Bryan Bossert said.
Although enforcement is the primary reason behind the random inspections done once each quarter, educating the public is also a goal of the ODT.
As of early afternoon, in this county agents had found one Lisbon store selling cigars that had not been properly taxed, with additional vendors still to be visited.
Agents declined to name that business but confiscated 21 miscellaneous cigars they said had been purchased out of state and without paying Ohio's tax.
"His cigars are looked at as contraband now," according to ODT Supervisor Rich Noss.
The owner "had been buying them for years in New Castle, Pa." and claimed not to know it was illegal, according to the agents.
An investigation will follow, and the store owner could be charged but will almost certainly be assessed for the unpaid taxes, they said.
A number of seizures were made in Jefferson County stores, agents indicated.
Agents checked random samplings of cigarette packages to make sure each carried the proper tax stamp and also checked to make sure the vendor had the proper license, which is renewable annually.
He said, "We see a lot of expired licenses, more in some areas than others," particularly in larger Ohio cities.
For many years, those licenses cost vendors $30 but that fee went up to $125 on Jan. 1, which Noss agreed could result in higher per-pack costs.
Currently, $2.25 of the cost of a pack of cigarettes constitutes state and federal taxes, according to administrative officer Will Ditto. That does not include any sales tax imposed.
"There is a state minimum on the cost to make it equitable statewide so mom and pop has the same playing field as someone like this," Noss said, referring to the local Giant Eagle, which was among the stores visited.
He said vendors can, however, change their markup to pass along the increase to their customers.
At the Giant Eagle, everything was found to be in order, although an agent did notice one brand on which only a tiny portion of the stamp was evident, which will be brought to the wholesaler's attention, since that's where the stamps originate by machine.
Also examined Wednesday were store invoices showing that the proper taxes were paid when purchasing the tobacco products from wholesalers.
Businesses are required to maintain these invoices three years. Noss said, "You have to have these purchase invoices to back up your story."
The agents have police powers and can issue a summons on the spot to those found in violation of the tax laws, with charges ranging from minor misdemeanors to felonies.
Not having the proper license, for example, is a fourth-degree misdemeanor, while purchasing tobacco products in one state and then selling them in Ohio could result in a felony charge.
With Columbiana and Jefferson counties nestled along the river so close to Pennsylvania and West Virginia, where tobacco taxes are less, this type of resale often occurs.
In Ohio, the cigarette tax is $1.25 per pack while in West Virginia it is 55 cents and, in Pennsylvania, just 35 cents. For other tobacco products (OTP), such as cigars or snuff, Ohio's tax is 17 percent and West Virginia's 7 percent, with no tax assessed on OTP in Pennsylvania.
In Ohio, the OTP distributor's license increased from $100 to $1,000 this year.
"You might think you're saving a buck or two by going across the river to buy your cigarettes, but you're violating the law," Noss cautioned.
The threshold at which a misdemeanor becomes a felony is six cartons, according to Noss, who said, "We use discretion; we're not looking for people with six cartons."
Nonetheless, if a person went to West Virginia, purchased six cartons of cigarettes and brought them back to Ohio, even for personal use, he could be charged with a fourth-degree felony.
For the most part, all cigarettes sold in Ohio must be sold in a face-to-face transaction, according to law. This means the sale of cigarettes over the Internet, in catalogues, by phone or mail order or other methods is illegal.
The laws surrounding tobacco taxation are complex, and when a charge is brought against a vendor, the county prosecutors are surprised to learn just what is and isn't legal, according to the ODT agents.
"Even prosecutors have to be educated," agent Bryan Bossert said.
Although enforcement is the primary reason behind the random inspections done once each quarter, educating the public is also a goal of the ODT.
Jan 18, 2010
Cigarette Tax Increases Bring Increased Crime
As much as 50 percent of the cigarettes consumed in the state of Washington would be smuggled in if a proposed $1 increase in cigarette taxes there passes, according to an Op-Ed by Center scholars today in the Seattle-Tacoma News Tribune.
Michael LaFaive, director of the Morey Fiscal Policy Center, and Todd Nesbit, a Penn State professor and adjunct scholar with the Center, wrote the Op-Ed based on a 2008 study they co-authored with Patrick Fleenor, an economist with the Tax Foundation, titled "Cigarette Taxes and Smuggling: A Statistical Analysis and Historical Review."
Their statistical modeling predicts how much cigarette smuggling will increase at various per-pack tax increases for 47 of the 48 contiguous states. The authors also explain that such increases in smuggling, not unlike the Prohibition Era, also lead to increases in violent crime.Permission to reprint this blog post in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited. Permission to reprint any comments below is granted only for those comments written by Mackinac Center policy staff.
Michael LaFaive, director of the Morey Fiscal Policy Center, and Todd Nesbit, a Penn State professor and adjunct scholar with the Center, wrote the Op-Ed based on a 2008 study they co-authored with Patrick Fleenor, an economist with the Tax Foundation, titled "Cigarette Taxes and Smuggling: A Statistical Analysis and Historical Review."
Their statistical modeling predicts how much cigarette smuggling will increase at various per-pack tax increases for 47 of the 48 contiguous states. The authors also explain that such increases in smuggling, not unlike the Prohibition Era, also lead to increases in violent crime.Permission to reprint this blog post in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited. Permission to reprint any comments below is granted only for those comments written by Mackinac Center policy staff.
Jan 15, 2010
Cigarette Manufacturing in China - new report published
This is the replacement for the May 2009 edition of Cigarette Manufacturing in China report. Industry Market Research Synopsis This Industry Market Research report provides a detailed analysis of the Cigarette Manufacturing in China industry, including key growth trends, statistics, forecasts, the competitive environment including market shares and the key issues
facing the industry. Industry Definition The Cigarette Manufacturing Industry in China (China Industry Code - 1620) comprises establishments primarily engaged in cigarette, cigar and cigarette filter manufacturing. Products manufactured include Virginia-type cigarettes, blend-type cigarettes, cigars and filter rods. The industry does not include manufacturing fiber tows for cigarettes. Report Contents The Key Statistics chapter provides the key indicators for the industry for at least the last three years. The statistics included are industry revenue, industry gross product, employment, establishments, exports, imports, domestic demand and total wages. The Market Characteristics chapter covers the following: Market Size, Linkages, Demand Determinants, Domestic and International Markets, Basis of Competition and Life Cycle. The Market Size section gives the size of the domestic market as well as the size of the export market. The Linkages section lists the industry´s major supplier and major customer industries. The Demand Determinants section lists the key factors which are likely to cause demand to rise or fall. The Domestic and International Markets section defines the market for the products and services of the industry. This section provides the size of the domestic market and the proportion accounted for by imports and exports and trends in the levels of imports and exports. The Basis of Competition section outlines the key types of competition between firms within the industry as well as highlighting competition from substitute products in alternative industries. The Life Cycle section provides an analysis of which stage of development the industry is at. The Segmentation chapter covers the following: Products and Service Segmentation, Major Market Segments, Industry Concentration and Geographic Spread. The Products and Service Segmentation section details the key products and/or services provided by this industry, highlighting the most important where possible to demonstrate which have a more significant influence over industry results as a whole. The Major Market Segments section details the key client industries and/or groups as well as giving an indication as to which of these are the most important to the industry. The Industry Concentration section provides an indicator of how much industry revenue is accounted for by the top four players. The Geographic Spread section provides a guide to the regional share of industry revenue/gross product. The Industry Conditions chapter covers the following: Barriers to Entry, Taxation, Industry Assistance, Regulation and Deregulation, Cost Structure, Capital and Labor Intensity, Technology and Systems, Industry Volatility and Globalization. The Barriers to Entry section outlines factors that can prevent a new company from entering this industry and also gives an indication of the extent to which this occurs. The Taxation section details all kinds of taxation that are specific or are particularly important to this industry, including taxation concessions. The Industry Assistance section refers to any government and/or other measures designed to improve the performance of this industry. The Regulation and Deregulation section details any applicable regulation and/or deregulation to this industry. The Cost Structure section details the average costs for a company operating in this industry as a percentage of total revenue. The Capital and Labor Intensity section provides a guide to the amount of capital used in production/providing a service compared to the amount of labor in the total mix of inputs. The Technology and Systems section acknowledges the latest technology and/or systems available to this industry within the country. Technology refers to machinery and equipment and systems refers to methods of production that enable better and more efficient production. The Industry Volatility section refers to the year on year fluctuations which occur in industry output. The Globalization section gives an indication of the extent to which the industry is global based on factors such as the level of foreign ownership, the proportion of demand accounted for by foreign operators and the volume of production conducted in other countries. The Performance chapter provides an analysis of both the industry´s Current Performance and Historical Performance. The Current Performance section provides the key analysis for the industry over the past five years with key performance indicators discussed. The Historical Performance section details previously important events in the development of the industry. The Key Competitors chapter lists the major players in the industry as well as an analysis of each major player´s activities in the industry. Market share information is included where possible. The Key Factors chapter covers the industry´s Key Sensitivities and Key Success Factors. The Key Sensitivities section outlines the key factors that are outside the control of an operator in the industry, but are likely to have significant impact on a business. The Key Success Factors section details the factors within the control of an industry operator and which should be followed in order to be successful in the industry. Often this will include behavior that will help to minimize the effects of the Key Sensitivities. The Outlook chapter is a key analysis section of the report and outlines expectations for the key industry indicators over the next five year period, including forecasts.
facing the industry. Industry Definition The Cigarette Manufacturing Industry in China (China Industry Code - 1620) comprises establishments primarily engaged in cigarette, cigar and cigarette filter manufacturing. Products manufactured include Virginia-type cigarettes, blend-type cigarettes, cigars and filter rods. The industry does not include manufacturing fiber tows for cigarettes. Report Contents The Key Statistics chapter provides the key indicators for the industry for at least the last three years. The statistics included are industry revenue, industry gross product, employment, establishments, exports, imports, domestic demand and total wages. The Market Characteristics chapter covers the following: Market Size, Linkages, Demand Determinants, Domestic and International Markets, Basis of Competition and Life Cycle. The Market Size section gives the size of the domestic market as well as the size of the export market. The Linkages section lists the industry´s major supplier and major customer industries. The Demand Determinants section lists the key factors which are likely to cause demand to rise or fall. The Domestic and International Markets section defines the market for the products and services of the industry. This section provides the size of the domestic market and the proportion accounted for by imports and exports and trends in the levels of imports and exports. The Basis of Competition section outlines the key types of competition between firms within the industry as well as highlighting competition from substitute products in alternative industries. The Life Cycle section provides an analysis of which stage of development the industry is at. The Segmentation chapter covers the following: Products and Service Segmentation, Major Market Segments, Industry Concentration and Geographic Spread. The Products and Service Segmentation section details the key products and/or services provided by this industry, highlighting the most important where possible to demonstrate which have a more significant influence over industry results as a whole. The Major Market Segments section details the key client industries and/or groups as well as giving an indication as to which of these are the most important to the industry. The Industry Concentration section provides an indicator of how much industry revenue is accounted for by the top four players. The Geographic Spread section provides a guide to the regional share of industry revenue/gross product. The Industry Conditions chapter covers the following: Barriers to Entry, Taxation, Industry Assistance, Regulation and Deregulation, Cost Structure, Capital and Labor Intensity, Technology and Systems, Industry Volatility and Globalization. The Barriers to Entry section outlines factors that can prevent a new company from entering this industry and also gives an indication of the extent to which this occurs. The Taxation section details all kinds of taxation that are specific or are particularly important to this industry, including taxation concessions. The Industry Assistance section refers to any government and/or other measures designed to improve the performance of this industry. The Regulation and Deregulation section details any applicable regulation and/or deregulation to this industry. The Cost Structure section details the average costs for a company operating in this industry as a percentage of total revenue. The Capital and Labor Intensity section provides a guide to the amount of capital used in production/providing a service compared to the amount of labor in the total mix of inputs. The Technology and Systems section acknowledges the latest technology and/or systems available to this industry within the country. Technology refers to machinery and equipment and systems refers to methods of production that enable better and more efficient production. The Industry Volatility section refers to the year on year fluctuations which occur in industry output. The Globalization section gives an indication of the extent to which the industry is global based on factors such as the level of foreign ownership, the proportion of demand accounted for by foreign operators and the volume of production conducted in other countries. The Performance chapter provides an analysis of both the industry´s Current Performance and Historical Performance. The Current Performance section provides the key analysis for the industry over the past five years with key performance indicators discussed. The Historical Performance section details previously important events in the development of the industry. The Key Competitors chapter lists the major players in the industry as well as an analysis of each major player´s activities in the industry. Market share information is included where possible. The Key Factors chapter covers the industry´s Key Sensitivities and Key Success Factors. The Key Sensitivities section outlines the key factors that are outside the control of an operator in the industry, but are likely to have significant impact on a business. The Key Success Factors section details the factors within the control of an industry operator and which should be followed in order to be successful in the industry. Often this will include behavior that will help to minimize the effects of the Key Sensitivities. The Outlook chapter is a key analysis section of the report and outlines expectations for the key industry indicators over the next five year period, including forecasts.
Jan 11, 2010
Number of Fires Caused by Cigarettes Down in New Jersey
A recent report on fire safety in the Garden State revealed the number of fires caused by cigarettes has been reduced and lawmakers attribute this to a 2007 law that requires all cigarettes sold in New Jersey be self extinguishing. But what do Fire Officials think?
Washington Township’s Fire Chief John Hoffman had this reaction:
"In reviewing the state of New Jersey statistics that they published in 2008, there were only 6 fire fatalities. The cause being attributed to careless smoking and that says a lot because those numbers used to be much higher in the past. Clearly the legislation that was passed has had a positive effect."
But that being said, Hoffman says you have to keep this data in mind:
"We're seeing a steady decline in actual fires that occur. While the calls for emergencies are steadily increasing, we're seeing a diversity of the kinds of emergencies that occur; flooding emergencies, car crashes."
But Hoffman says fire fighters could use all the help they can get and he's anxious to see if this downward trend in cigarette fires continues in the next couple of years.
Washington Township’s Fire Chief John Hoffman had this reaction:
"In reviewing the state of New Jersey statistics that they published in 2008, there were only 6 fire fatalities. The cause being attributed to careless smoking and that says a lot because those numbers used to be much higher in the past. Clearly the legislation that was passed has had a positive effect."
But that being said, Hoffman says you have to keep this data in mind:
"We're seeing a steady decline in actual fires that occur. While the calls for emergencies are steadily increasing, we're seeing a diversity of the kinds of emergencies that occur; flooding emergencies, car crashes."
But Hoffman says fire fighters could use all the help they can get and he's anxious to see if this downward trend in cigarette fires continues in the next couple of years.
Jan 6, 2010
New Mich. cigarette law has some smokers fuming
A new state law intended to reduce the fire hazard posed by smoldering cigarettes has frustrated some Michigan smokers, who complain that the safer cigarettes taste foul.
The law, which takes effect Jan. 1, requires all cigarettes sold in Michigan to be engineered to automatically extinguish when left unattended. To comply, cigarette companies usually add two or three special bands to the cigarettes’ paper that, when lit, reduce the flow of oxygen to the tobacco, thereby slowing the stick’s rate of burn.
If a smoker does not draw on the lit cigarette, the bands effectively smother it.
Ashley May, a 22-year-old smoker from Roseville, told The Detroit News that the fire-safe smokes taste foul and are hard to keep lit.
“I don’t like them,” she said after a drag from a Kool. “You have to constantly puff on them every 30 seconds or else they’re going out. And then when you try to re-light them, they taste horrible.”
Although May and her husband Ed do not like the fire-safe cigarettes, they said they are a good idea if they end up reducing the number of house fires caused by unattended cigarettes.
Gov. Jennifer Granholm approved the law in June, making Michigan the 49th state to pass fire-safe cigarette legislation.
The new cigarettes won’t end all fires started by smoking materials, but they will help lower the numbers of deaths and injuries caused by them, said Ronald Farr, Michigan’s Fire Marshal.
“It’s a life-safety issue,” he said. “That’s the single biggest point for them.”
Fires caused by smoking-related materials in Michigan killed four people last year and injured 33 others, including seven firefighters, according to the state’s Bureau of Fire Services.
Nationwide, fires ignited by cigarettes claimed 780 lives in the United States in 2006, according to the Massachussetts-based National Fire Protection Association.
With Michigan’s new law looming, tobacco retailers such as Joe Odisho, the owner of Smokers’ Planet in Roseville, have heard plenty of complaints about the new cigarettes.
“I’ve had people come in (and) ask if I have a brand without (the fire-safe cigarettes) and then turn around and walk out when I tell them ‘no,”’ he said.
Under the new law, cigarette manufacturers that want to sell their products in the state have to register them with the state’s Bureau of Fire Services. They also must certify that their cigarettes were made with the self-extinguishing technology.
The state will charge cigarette makers a $1,250 fee to register each family brand of their products they want sold in Michigan. The companies will also have to re-certify their products every three years.
The packaging for cigarettes must carry a special mark on them – FSC for Fire Standard Complaint – as well.
Any manufacturer, distributor or retailer who continues to sell unsafe cigarettes after Jan. 1 faces fines of $100 per pack and seizure of the product, according to the law.
The law, which takes effect Jan. 1, requires all cigarettes sold in Michigan to be engineered to automatically extinguish when left unattended. To comply, cigarette companies usually add two or three special bands to the cigarettes’ paper that, when lit, reduce the flow of oxygen to the tobacco, thereby slowing the stick’s rate of burn.
If a smoker does not draw on the lit cigarette, the bands effectively smother it.
Ashley May, a 22-year-old smoker from Roseville, told The Detroit News that the fire-safe smokes taste foul and are hard to keep lit.
“I don’t like them,” she said after a drag from a Kool. “You have to constantly puff on them every 30 seconds or else they’re going out. And then when you try to re-light them, they taste horrible.”
Although May and her husband Ed do not like the fire-safe cigarettes, they said they are a good idea if they end up reducing the number of house fires caused by unattended cigarettes.
Gov. Jennifer Granholm approved the law in June, making Michigan the 49th state to pass fire-safe cigarette legislation.
The new cigarettes won’t end all fires started by smoking materials, but they will help lower the numbers of deaths and injuries caused by them, said Ronald Farr, Michigan’s Fire Marshal.
“It’s a life-safety issue,” he said. “That’s the single biggest point for them.”
Fires caused by smoking-related materials in Michigan killed four people last year and injured 33 others, including seven firefighters, according to the state’s Bureau of Fire Services.
Nationwide, fires ignited by cigarettes claimed 780 lives in the United States in 2006, according to the Massachussetts-based National Fire Protection Association.
With Michigan’s new law looming, tobacco retailers such as Joe Odisho, the owner of Smokers’ Planet in Roseville, have heard plenty of complaints about the new cigarettes.
“I’ve had people come in (and) ask if I have a brand without (the fire-safe cigarettes) and then turn around and walk out when I tell them ‘no,”’ he said.
Under the new law, cigarette manufacturers that want to sell their products in the state have to register them with the state’s Bureau of Fire Services. They also must certify that their cigarettes were made with the self-extinguishing technology.
The state will charge cigarette makers a $1,250 fee to register each family brand of their products they want sold in Michigan. The companies will also have to re-certify their products every three years.
The packaging for cigarettes must carry a special mark on them – FSC for Fire Standard Complaint – as well.
Any manufacturer, distributor or retailer who continues to sell unsafe cigarettes after Jan. 1 faces fines of $100 per pack and seizure of the product, according to the law.
Jan 4, 2010
Smoking tax rise explored by Govt
Associate Health Minister Tariana Turia last year spoke supportively of tobacco tax increases in a speech that has put pressure on the Government on a range of tobacco policies.
She said that increasing the tax was "worth exploring if we are genuine about wanting to prevent uptake" of smoking.
As campaigners step up the pressure on ministers this year through a parliamentary select committee inquiry into smoking among Maori, the Herald has examined the likely outcomes in a three-part series starting on Monday.
The Government will not say whether tobacco taxes will rise this year or discuss the likely size of an increase. Health Minister Tony Ryall refused to be interviewed for the series and Mrs Turia's staff referred inquiries to the ministry.
However, acting deputy director-general Ashley Bloomfield said officials had advised Mrs Turia on a tobacco tax rise.
"No final decisions have been taken, but it's something that's definitely being considered. We do know there's good evidence that increasing the price ... does affect smoking rates. Young people are particularly sensitive to increases in price."The excise tax on tobacco was last increased above the rate of inflation in 2000.
Smokers spend about $1.6 billion a year on tobacco, of which more than 1 billion is excise tax and GST.
Last year, the excise tax was around $6 for a $10 pack of 20 cigarettes, but because it is levied by tobacco content rather than per cigarette, roll-your-own smokes, which tend to be thinner, are in effect taxed more lightly than factory-made cigarettes.
Yet rollie smokers have been shown in research to suck out 28 per cent more smoke per cigarette, potentially putting them at even greater risk of smoking-related diseases.
The excise tax is increased annually in line with the consumers price index.
Smokefree campaigners have long pushed for a rise above the CPI and a double increase on loose tobacco, to bring thin rollies into line with factory-made cigarettes - and they appear to have Mrs Turia's support.
"Tax is one of our core strategies," said the Smokefree Coalition's director, Prudence Stone. "When the tax goes up, consumption goes down immediately. We need to have a schedule of tax increases up to 2020 that prices tobacco out of more and more wallets."
Smokers aged 18 or 19 are equally likely to smoke rollies or factory-mades. But those aged 15 to 17 are significantly more likely to smoke rollies than factory-mades, mainly because they are cheaper, ministry surveys show.
In the younger group, more than 40 per cent report being supplied by family members or friends, while 60 per cent said they bought tobacco themselves. The legal age to be sold tobacco is 18.
The coalition and its member groups are calling for radical policies to "denormalise" tobacco and accelerate the decline of smoking. They will urge the Maori Affairs select committee tobacco inquiry to agree.
Around 20 per cent of adults and 12 per cent of Year 10 students smoke regularly, but the rate of decline has slowed and the Maori and Pacific rates are still significantly higher.
A rising percentage of young people have never had a puff, which it is hoped will flow through into reduced adult smoking.
She said that increasing the tax was "worth exploring if we are genuine about wanting to prevent uptake" of smoking.
As campaigners step up the pressure on ministers this year through a parliamentary select committee inquiry into smoking among Maori, the Herald has examined the likely outcomes in a three-part series starting on Monday.
The Government will not say whether tobacco taxes will rise this year or discuss the likely size of an increase. Health Minister Tony Ryall refused to be interviewed for the series and Mrs Turia's staff referred inquiries to the ministry.
However, acting deputy director-general Ashley Bloomfield said officials had advised Mrs Turia on a tobacco tax rise.
"No final decisions have been taken, but it's something that's definitely being considered. We do know there's good evidence that increasing the price ... does affect smoking rates. Young people are particularly sensitive to increases in price."The excise tax on tobacco was last increased above the rate of inflation in 2000.
Smokers spend about $1.6 billion a year on tobacco, of which more than 1 billion is excise tax and GST.
Last year, the excise tax was around $6 for a $10 pack of 20 cigarettes, but because it is levied by tobacco content rather than per cigarette, roll-your-own smokes, which tend to be thinner, are in effect taxed more lightly than factory-made cigarettes.
Yet rollie smokers have been shown in research to suck out 28 per cent more smoke per cigarette, potentially putting them at even greater risk of smoking-related diseases.
The excise tax is increased annually in line with the consumers price index.
Smokefree campaigners have long pushed for a rise above the CPI and a double increase on loose tobacco, to bring thin rollies into line with factory-made cigarettes - and they appear to have Mrs Turia's support.
"Tax is one of our core strategies," said the Smokefree Coalition's director, Prudence Stone. "When the tax goes up, consumption goes down immediately. We need to have a schedule of tax increases up to 2020 that prices tobacco out of more and more wallets."
Smokers aged 18 or 19 are equally likely to smoke rollies or factory-mades. But those aged 15 to 17 are significantly more likely to smoke rollies than factory-mades, mainly because they are cheaper, ministry surveys show.
In the younger group, more than 40 per cent report being supplied by family members or friends, while 60 per cent said they bought tobacco themselves. The legal age to be sold tobacco is 18.
The coalition and its member groups are calling for radical policies to "denormalise" tobacco and accelerate the decline of smoking. They will urge the Maori Affairs select committee tobacco inquiry to agree.
Around 20 per cent of adults and 12 per cent of Year 10 students smoke regularly, but the rate of decline has slowed and the Maori and Pacific rates are still significantly higher.
A rising percentage of young people have never had a puff, which it is hoped will flow through into reduced adult smoking.
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