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Illegal sales of tobacco products are costing our nation and states billions in lost revenue. Increases in federal and state government excise taxes have created an explosion of illegal tobacco product sales over the Internet, and such purchases are evading federal, state and local taxes.
How is this happening? Remote sellers typically sell untaxed or low-taxed cigarettes over the Internet or by mail or telephone to consumers without paying the taxes owed to the states. Indiana is losing significant tax revenue because of this illegal practice, and consumers are often unaware that they are personally liable for any applicable unpaid taxes.
Fortunately, there is a potential solution in the Senate known as the Prevent All Cigarette Trafficking Act of 2009. This legislation closes a number of gaps in federal law regulating “remote” or “delivery” sales of cigarettes and smokeless tobacco products and prevents anyone underage from obtaining tobacco products remotely.
In 2000 there were only about 40 domestic Internet sellers of cigarettes, but by 2006 there were more than 770 Web sites selling cigarettes to U.S. smokers, and nearly half of these sites were based outside the United States. Additionally, there has been a huge expansion in the area of Native American tribal Internet retailers, to the point that they are now considered to be a majority of the Internet sellers in operation today. Most, if not all, of these sales, are avoiding state and local taxes.
I encourage our U.S. senators, Richard Lugar and Evan Bayh, to support and co-sponsor the Pact Act of 2009 because it is an important opportunity to further protect the legitimate channels of distribution for cigarettes and smokeless tobacco in Indiana.
RICK BLUESTEIN President Indiana Wholesale Distributors Association Inc. Indianapolis
