Cheap cigarettes love

Robert Rubin, an Internet analyst with Forrester Research, a business research firm, estimates that online sales accounted for 3 percent of the more than 400 billion cigarettes sold last year. But, he predicts, online sales will grow to 14 percent by the year 2005. "They''re cheaper; that''s the only reason," the 30-year-old Jersey City woman said.
As states continue to increase cigarette taxes to raise revenue and close budget gaps, more and cheap cigarettes online more smokers are turning to the Internet. But online purchases still account for only a small cheap cigarettes online fraction of overall tobacco sales.
"I''d like to think that everyone''s coming to us, but they''re not," said Bob Benzing, a spokesman for CigarettesExpress.com, one of the rare online dealers willing to discuss the Internet cigarette business.

A carton of premium cigarettes costs about $30 on the Internet, compared with $45 to $50 in retail outlets in New Jersey, a savings of up to 40 percent. Shipping costs increase that price slightly, though most online dealers offer volume discounts and some provide free shipping with the purchase of a certain number of cartons.
Benzing said cheap cigarettes online smokers interested in saving even more money can purchase so-called "lower-tier" or value generic brands, such as USA Gold, Double Diamond and Roger, at prices as low as $10 to $13 a carton. These cigarettes aren''t available at most retail outlets because the major manufacturers won''t allow them to be sold alongside their more popular and expensive brands, Benzing said. Cigarettes are cheaper on the Internet than at regular retail outlets because the Web dealers do not charge state sales tax, though cheap cigarettes online they are supposed to report customers'' names to state treasurers for follow-up.
Because states recover little of the cigarette excise taxes from online sales, Rubin estimates, they lose some $300 million a year in revenue, an amount that will increase to $1.4 billion in three years.
Eighteen states have increased their sales tax on cigarettes since the start of the year, with the biggest boost occurring in Massachusetts, where a 75-cent hike gives the state the highest levy in the country at $1.51 a pack. New Jersey''s tax was raised 70 cents recently to $1.50, tying New York for second highest. A pack of name cigarettes costs about $5 in New Jersey.

"That''s not something that happens a lot," Rubin said.
Ralph Siegel, a spokesman for the New Jersey Department of the Treasury, said New Jersey recovers less than $1 million a year in taxes from customers whose Internet cigarette purchases were reported. He said he did not know how much the state was losing from cheap cigarettes online purchases not reported.
New Jersey collected $394.6 million in cigarette sales taxes last year, up from $386.5 million in fiscal 2001.
The Native American tribes that run many of the Internet cigarette Web sites refuse to report who their customers are.
"The sovereign nations do not report to state government -- period," said Benzing, whose firm is run by members of the Seneca Nation of Indians on the Allegany Indian Reservation in Salamanca, N.Y.
That point is made abundantly cheap cigarettes online clear on the CigarettesExpress.com Web site, which boasts, "And we do not ever share your personal information with any other company or government agency!"
A trade association cheap cigarettes online of New York convenience stores took the issue to court last year, trying to force Indian tribes to comply with the federal law, but the U.S. Supreme Court would not hear the case. Benzing said there is a marked jump in his firm''s sales whenever a state raises its tax on cigarettes. "It causes an immediate reaction," he said. "The day it happens, we see an increase in sales."
Under a federal law known as the Jenkins Act, Internet cigarette dealers are required to report customers'' names, addresses and purchases to the state in which they live, but the requirement is rarely enforced.
Convenience stores stand to lose the most from the Internet competition, with cigarette sales totaling $43 billion last year, or almost 40 percent of their overall retail volume, according to the National Association of Convenience Stores'' annual report.
Critics of Internet sales also object to the Web dealers'' inability or unwillingness to enforce a ban on sales to minors. Though most of the Web sites offer some variation of "Click here only if you are over 18 years old," the critics claim there is no way of verifying the purchaser''s age.
"I only know what cheap cigarettes online common sense tells me," said Regina Carlson, executive director of the New Jersey Group Against Smoking Pollution. "There is clearly no way you can prove somebody''s age over the Internet."
Rubin recommends several ways to prevent online sales to minors, including the use of child safety software, such as SurfControl, that parents can install to restrict access to objectionable Web sites. He also favors a federal requirement that all shipped packages containing cheap cigarettes online tobacco products be marked to require an adult''s signature for delivery.

They also are reluctant to discuss their business.
Calls to some two dozen Internet merchandisers either were not returned or met with a polite refusal.
"We don''t speak to reporters," said someone at InternetSmokes.com before hanging up.
Benzing, the only one to answer questions, said CigarettesExpress.com is sensitive to criticism of the cyber cigarette business and strives to address the objections, such as sales to minors. He said the firm compares customers to voter registration and state drivers'' license databases to screen out minors and will ship cigarettes only to the home address of the credit card purchaser, assuring that parents at least would be advised of any purchases on their monthly statement.
"If a kid goes to a convenience cheap cigarettes online store to buy cigarettes, parents aren''t going to get a statement in 30 days," the company spokesman said. Estimates of how many Internet cigarette sellers there are vary, but a directory of dealers at www.cigaretteyellowpages.com lists 40 Web sites. Benzing cheap cigarettes online and Rubin think there are far more, though some are no more than mom-and-pop operations based in someone''s home.
"There''s just hundreds of them, and they pop up and go away and nobody regulates them," Rubin said.
Benzing said he realizes the tobacco industry will always have its critics, whether customers are buying at their computer keyboards or the corner grocery store.
"We''ll never be politically correct and we can''t help that," he said. "But we don''t have to be irresponsible."