New York Set to Raise Cigarette Taxes

New York state legislators and Gov. David Paterson have reached a tentative deal to raise cigarette taxes in the state by $1.60 a pack, the New York Times reported June 18. 

At $4.35 per pack, this would give New York the highest cigarette tax in the country. 

A pack of premium cigarettes in New York City, where the combined tax would rise to $5.85 per pack, is soon expected to cost in excess of $10. The state also plans to begin taxing cigarettes sold on Indian reservations, and raise the wholesale taxes on all tobacco products in general. 

Legislators expect the proposal –- part of an emergency budget to address a $9-billion shortfall –- to create $440 million in revenue for the state. While Senate Republicans have vowed to vote against any budget extender that includes tax increases, Robert L. Megna, the state budget director, said he did not think the opposition would vote in favor of shutting down the state government.

Anti-tobacco advocates are predictably cheered by the news while retailers insist that the measure will merely increase black-market cigarette sales and ruin legitimate businesses. 

More controversial is the proposed tax on sales sold at Indian reservations, and there are signs that New York tribes are gearing up for a fight. 

“We have to protect and honor the treaties that were made by our ancestors,” said J. C. Seneca, a tribal councilor for the Seneca Nation and co-chairman of their foreign-relations committee. “If the state wants to move in that direction, then really we have no choice but to defend our territory and our people’s rights.”

Officials counter that tribes will still be able to enjoy tax-free tobacco for their residents. 

“We’re trying to … make it clear that their product for their consumption is tax-free,” Megna said. “The only thing we’re trying to tax is New York State residents’ consumption of taxable products.”