Relates to the registration fee for retail tobacco dealer registration

6 Co-sponsors

• Darrel J. Aubertine
• John J. Bonacic
• Neil D. Breslin
• Jeffrey D. Klein
• George D. Maziarz
• Toby Ann Stavisky

Title of bill

An act to amend the tax law, in relation to the registration fee for retail tobacco dealer registration

Purpose or general idea of bill

Adjusts the annual registration fee for retail dealers of cigarettes or tobacco products and vending machines selling cigarettes or tobacco products.

Summary of specific provisions

Section 1 would amend subparagraph (a) (ii) of Section 480-a-2 of the tax to revise the registration fee for retail establishments selling cigarettes or tobacco products to $200 per year, plus an additional surcharge of $ 100 for an establishment with one point on its tobacco enforcement record and an additional surcharge of $200 for an establishment with two points on its tobacco enforcement record; and would amend subparagraph (a) (iii) of Section 480-a-2 of the tax law to revise the registration fee for vending machines through which cigarettes or tobacco products are sold to $200 per year, rather than $250, $625, or $1,250 depending on gross sales under existing law.

Justification

Section 125 of budget bill A.158B enacted enormous increases in the annual registration fee that retail establishments selling tobacco products pay to the state Department of Taxation and Finance. The 2009 fee was $100 per store. Under the recently approved budget, however, the 2010 fee will be $1,000, $2,500, or $5,000 per store depending on the store's gross sales of all products, not just tobacco.

The purpose of this fee is to maintain a registry of retail tobacco dealers for taxation and enforcement purposes, not to generate extra revenue for the state budget or penalize tax collecting businesses for selling tobacco to adult customers in accordance with state and local regulations.

Increases of 900%, 2,400% or 4,900% in these small businesses fees are preposterous, particularly in the midst of the worst economic recession in 40 years. Moreover, as New York State struggles to retain jobs, this fee hike is specifically designed to force 5,000 to 10,000 retail stores to quit selling tobacco, sacrificing a major product category that historically has driven customer traffic and contributed to their overall viability.

Rather than reducing tobacco consumption, having fewer licensed tobacco retail outlets available would drive more smokers to buy from unlicensed sources of tobacco, such as tribal stores, the Internet, and the black market - further reducing state excise tax and sales tax revenue.

In addition, the resulting drop in customer count at those retail outlets that also sell New York Lottery tickets would reduce lottery sales, and thus lottery aid to education, an unintended fiscal consequence that was never factored into the revenue forecasts provided in the new budget.

Prior legislative history

New bill.

Fiscal implications

By preserving tobacco excise tax and sales tax revenue as well as lottery revenue that otherwise would be lost due to the inability of thousands of retail establishments to afford the exorbitant

registration fee to continue to sell tobacco products, this bill would have a net positive revenue impact on the 2009-2010 state budget.

Effective date

This act shall take effect immediately.