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Excise taxes on cigarettes alone are expected to reach $790 million this year, the state Treasury Department said. Heading into their fourth consecutive year of grappling with multi-billion-dollar budget deficits, state lawmakers are looking for a way to tax Internet cigarette sales, according discount cigarettes online to the Trenton Bureau.

Currently, smokers are forced to ante up a $2.05 excise tax on each pack of cigarettes sold in New Jersey. But with that levy raised in each of the last two years, Internet sales have cropped up as a way to avoid government collectors.

"We're trying to do two things here. We're making sure underage kids are not buying cigarettes and also to protect legitimate cigarette sellers in New Jersey," said Assemblywoman Loretta Weinberg (D-Bergen), who is spearheading the effort. "I think there is a growing problem."The Assembly Appropriations Committee on Monday is expected to start deliberations on the measure, which is similar to legislation pending discount cigarettes online or enacted in 13 states around the nation.Sen. Leonard Lance (R-Hunterdon/Warren) told the Trenton Bureau he has not seen the bill but is anxious to have it appear before the Senate Budget Committee.At an estimated 500 sites, a 10-pack carton of cigarettes will sell for just $30 per carton online, while the same brand can cost upwards of $55 in stores, according to the news source.State officials have no estimate of how much tax discount cigarettes online money is lost. But sponsors maintain Internet tobacco sales will cost the 50 states a collective $1.4 billion in 2005, a year in which New Jersey is projected to face a $4-billion shortfall.It's substantial," Treasury Department spokesman Tom Vincz said of the money, adding his agency has yet to rule on the bill. "We are generally supportive of any initiative that will help us enforce an excise tax."The Jenkins Act also places the onus on buyers to pay appropriate taxes, not sellers.

 

"It's only going to continue to grow. And the only way we're going to start to really address any illegal actions is by passing comprehensive legislation," said Jamie Drogin, a spokeswoman for tobacco giant Philip Morris U.S.A. "Online cigarette sales have grown as the prices have risen. What the adult smokers have done is that they've sought out discount cigarettes online lower prices in illegal venues." This loophole allows re-importers, offshore firms buying American cigarettes tax-free, to ship them back into the country without reflecting the excise taxes in the price charged to consumers. Weinberg's legislation would order the online brokers to furnish the state with lists of those to whom they sell, reported the news source.

Left unclear is the legislation's effect on sales originating in American Indian reservations.Smokers trying to avoid the state excise tax by buying mail-order cigarettes may be tripped up by a new state law.
Then again, maybe they won't be.Senate Bill 504 requires mail-order companies to report the names of their Indiana cigarette customers. The companies also have to either pay the discount cigarettes online excise tax or advise the customer to pay.
Possession of more than 71/2 cartons of untaxed cigarettes is a misdemeanor the first time and a felony on the second offense.
But so far, even though millions of packs of cigarettes are apparently slipping by untaxed, not much has happened.

Why all the fuss over a tiny tax stamp on a pack of smokes? Those stamps add up -- possibly to $60 million in taxes the state's missed out on.
The excise tax more than tripled last year. Since then, the sales of taxed cigarettes have declined nearly 26 percent from a year earlier, according to my review of monthly state reports. That adds up to discount cigarettes online the millions in uncollected taxes.
Maybe people are smoking less because of the higher cost. More likely, they're buying smokes in low-tax states like Kentucky discount cigarettes online or buying them by mail-order to avoid Indiana taxes.
"I can't blame a customer for trying to save some money," said Vince DeFabis, an owner of Delaware News Company near the City-County Building.
The newsstand is busy all day with people lined up for cigarettes, lottery tickets, newspapers and magazines.
DeFabis said he had met only one person who bought untaxed cigarettes by mail.
Still, mail-order sales, some placed through a growing list of Web sites, are unfair to Indiana retailers, the discount cigarettes online sponsor of the new law says.
"We have the vendors of cigarettes here in the state who are collecting the tax," said state Sen. Tim Lanane, D-Anderson. "And these Internet sellers are trying to get around doing that."
Other people may just be driving to Kentucky where the tax on a pack is 3 cents, instead of Indiana's 55.5-cent tax.
The Department of Revenue is trying to get the word out that people can be prosecuted for cigarette smuggling.

Tekle hasn't gone to court yet, but two things might suggest that we're not exactly putting the fear of the Lord into cigarette smugglers.
First, though millions of packs of untaxed cigarettes are falling through the cracks, only two people have been busted.
Second, look at the penalty in the only case to settle so far.
The Department of Revenue says authorities "recovered a large quantity of (untaxed) cigarettes" last fall discount cigarettes online from a store run by Clyde R. Johnson, 68, Veedersburg.
If you want to discourage smuggling, you might make the penalty harsher than, say, a traffic ticket.Last week, the agency announced the arrest of a Louisville man, Yohannes T. Tekle, on a charge of possession with intent to sell untaxed cigarettes at his grocery store in nearby Clarksville, Ind.
The maximum penalty for a first offense, the revenue department announced ominously, is a year in prison and a $5,000 fine.
The standard ticket for speeding in Marion County is $110.
And Johnson's fine? Just $100.