Another bad news for cigarette retailers
Published on April 6, 2009 3:18 AM
On April’s Fools Day the federal tax on cigarettes and other tobacco containing products would be raised. Each cigarette pack would cost 62 cents more expensive than now. Thousands of customers and employees of cigarette shops have already felt the burden of increased prices on their pockets. However, the most amusing jokes for these people are yet to come.
New York State Governor David Paterson proposed to increase the annual fee that stores have to pay in order to obtain the right to sell cigarettes among other products. This proposal has already triggered a wave of anger from shop owners. The actual registration cost is $100.
According to the officials, should this proposal be approved, the increased fees would come into force next year. With the revenue is expected to reach as much as $20 million within the next year period.
Monique Sands, Governor’s spokesperson stated that the fee increase should be regarded as an attempt to collect more benefit to state treasury, and the governor hopes that the cigarette retailers would understand him and situation the state budget has been facing.
She also said that they would never decide to tax people more if it was a usual budget year. However, with the difficult economic situation in the country has contributed to severe budget cuts they had no choice.
In accordance with Governor’s proposal, the new registration fee would be connected with stores’ gross profits. Stores that generate less than a million annually would have to give $1,000 to the treasury each year. Stores that gain up to $10 millions each year would have to pay $2,500. And finally, stores gaining more than $10 million in gross profits would be required to fork out $5,000 annually.
Patrick Moore, Newsstand Operators Association chairman declared that the officials simply do not think about diminutive cigarette retailers like sidewalk news stands that largely rely on cigarette sales. Therefore, the fee would beat them into pieces since they could not afford to pay for the license.
Mr. Moore added that people would risk loosing too many regular clients if they would not sell cigarettes along with newspapers. However, paying $1000 would be a larger-than-life price for them and would see many people get out of the business and become jobless. He said that the proposal is unfair and even devastating for people in the times of economic downfall.
Peter McDougal, the 59-year-old Red Pipe store manager complained that up to a half of stores would simply remove cigarettes from their stores. He mentioned that he has been very much against this discreditable proposal.
Mr. McDougal said that although he was born in times of economic recession when life was very difficult, officials had lowered prices instead of taxing everything. He mentioned that if authorities proceed with tax increases, the country would never ever overcome recession. "I was born in the recession. I know what is exactly a recession," said the manager.
Proposal opponents consider that the approval of this bill would lead to strengthening of cigs market, since many people would try to find other ways to buy less expensive cigarettes. Street gangs earn millions each year selling counterfeit cigarettes. In addition, state treasury loses almost $1 billion each year to tax-free cigarettes made and distributed across Indian reservation territories.
