Six Reasons the New York City Council Should Reject the Proposed New Tobacco Retailing Restrictions

PRESS RELEASE FROM NYACS

ALBANY NY (10/24/2013)(readMedia)– James Calvin, president of the New York Association of Convenience Stores, on Thursday offered six reasons the New York City Council should reject the proposed tobacco retailing restrictions expected to be on its October 30 meeting agenda:

They fail to address the real problem. Driven by tax evasion, New York City has the most pervasive illegal cigarette trade in the entire country. From 2000 to 2011, the City and the State increased their combined cigarette excise tax by 814 percent, spawning a flourishing black market that today supplies over half the cigarettes consumed by New Yorkers. Reversing this huge tax drain and public health calamity should be the City Council’s primary focus, not making law-abiding retailers forfeit more business and jump through more hoops.

They’ll make it tougher for legitimate retailers to compete. Tax-collecting shops already have to charge around $6 a pack more than unscrupulous “tax-free” bootleggers. Now they will lose the only tools at their disposal to have any chance of competing on price – discounts, coupons, and other price promotions – and be saddled with an arbitrary price floor certain to drive even more cigarette sales into the arms of black-marketeers.

They will cost New York State taxpayers millions of dollars. If 18, 19, and 20-year-old smokers can no longer buy cigarettes in the City, they’ll no longer pay the $4.35-per-pack State excise tax, or the State sales tax of 4 percent. Plus, the State receives 46% of the revenue from the City excise tax of $1.50 per pack. All told, the drop in taxable sales will leave a hole in the New York State budget as big as $33 million, according to economists Orzechowski & Walker (attached).

They ignore the facts about higher tobacco purchase ages. Four states currently have a purchase age of 19. According to the Centers for Disease Control as of 2011, the adult smoking rates in two of them were lower than New York State’s rate of 18.1% (NJ at 16.8% and UT at 11.8%), but the other two were much higher (AL at 24.3% and AK at 22.9%). More importantly, the legal purchase age is not the same as the legal smoking age. Most teen smokers get cigarettes from adult relatives and friends – not from retail stores – according to the CDC. Incredibly, for all its bluster about the dangers of youth smoking, the City has no law prohibiting tobacco use by minors.

They will only feed the illegal sales epidemic. Inside licensed stores, smokers ages 18, 19, or 20 will no longer be able to buy tobacco, but it will be easy for them to find an illegal street dealer down the block who could care less about age verification or tax collection. The price floor and discounting ban will further chase sales to the black market.

They’re going to cost the City jobs. A recent economic impact study by John Dunham & Associates (attached) shows that passage of these tobacco restrictions would force hundreds of licensed stores out of business and jeopardize 9,700 jobs in neighborhood retailing.

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