Tobacco profits to go up in smoke?
Updated: 04/09/2009 05:53 AM
By: Britt Godshalk

ALBANY, N.Y. -- "It is just ludicrous," said Jim Calvin, the president of the New York Association of Convenient Stores. "How can the state justify increasing a fee on any small business by 900 percent or 4,900 percent?"

The folks at NYACS have smoke coming out of their ears. The cost to sell cigarettes in New York just went from $100 annually per store, to $1000, $2,500, even $5,000, depending on the store's gross sales of all products.

"Many of them are going to make the calculation that it's not worth it," said Calvin. “And actually the goal of this higher fee."

In a statement, the state Department of Budget said, "This public health initiative will help decrease the availability of tobacco products, which cost the lives of thousands of New Yorkers each year. Additionally, it will provide critical resources to fund health care programs."

Tobacco profits to go up in smoke?
A measure passed in this year's state budget has sparked a hot debate, this time over an increase to the state's fee on cigarette and tobacco retailers. Our Britt Godshalk takes a look.

"To say that if our stores have to stop selling tobacco, there won't be any more tobacco and people won't have access to it, no, that's baloney. They are just going to go to these unregulated outlets that are beyond the reach of New York State Regulation and Taxation," said Calvin.

"Whether it's a guy on the street in NYC, or the Internet, Native Americans, even Vermont," said Christian King, who owns a chain of convenience stores in the Albany area. "We're pushing people towards these alternative sources."

"Those customers who stop coming through the door, not only are they not buying tobacco products any longer, but they aren't buying other products either, a soda, a coffee, a newspaper," said Calvin.

NYACS says many customers who come in to buy cigarettes pick up a lottery ticket on the way out as well, but if they don't come in to buy cigarettes, they won't buy lottery tickets either. The lottery provides dollars for the state education budget, dollars that NYACS says will now go up in smoke.

"Even as little of a one percent drop in lottery sales would translate to a loss of more revenue than this license fee increase would generate," said Calvin. "So the state has done its homework on how this is going to impact the budget as a whole."

The fees will come due in September.
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