Tobacco Documents Online

, _ - .~, DAILY NWSy WEDNESDAY, AUC'ST 911978 r Buttlegging at the crossroads Cut the tax ... Only the mob would bleed B'y MORRIS W'EINTR'AU'B N EW YORK STATE is presently confronted with a decision that must be made ini the next few weeks and could affect the moral and political climate in the whol'e stat'e., A decision to reduce the cigaret tax couldi destroy the boot- leggang of cigarets in New York. If this billl is passed' by the Legislature and signed by the governor, it is predicted that there would bee no loss in revenue to, the state or to the Cityof New York. However, it would take away approximately $70milIilon ~ from organized crime. Are the State Legislature. and the governor willing to fight organ- ized crime? Ever since the state cigaret tax was doubled in 1965;, from 5c a pack toi 10c, cigaret bootlegging has been rampant in New York. Since then,, one out of' everyfo~ur packssold in thiestate, is, bootle~gged; andi one out of every two packs in the city is illegal. W In the last 14 years all efforts at~ enforcement have failed to stop this illegal activity, even though ~ penalties have been increased and', enforcementl units have been enl'arbed. Interstate organizat'ions have been formed~, and, even with the help of federal agencies, very few people have gone, to jail' becausee the eourts are very lenient toward this illegal activity. Added'' to al'1 these problems, the cigaret dis- tribution ind'ustry is being, assaulted by organized criime. There is no way that they can now compete for customers within the state of New York on the open market. Old-time legitimate wholesalers, re- tailers and vending operators have either liquidated or sold their businesses because they are unable to cope with the problem. Some Tegztimate distrib- utors have even been threatened with physical harm~ Added to all these problems has been the. lloss of approximately 2,500 jobs in the industry, the closing down of'many legitimate re ai1' -estab- lishm~ents, and the ever-increasi~ng mo ement~ of racketeers to~ get into, the wholesaling, ve~ndi~ng' and retail businesses to assure their distribution of i1- legal cigarets. I bellievethatiE' thi& trend is not curtailed, the underworld, through the distribution of their il- legal cigarets, will control the distributio.ni of other - allied products, such as candy, cigars, sundries and even groceries through 100,000 outlets throughout the, st'ate:• This will givethem, theoutlletst& sell other i31ega1 merchandise such as pornography,, drugs and stolen property. The disparity in price between the 1'ow-tax states and New York is the crux of the problem. In December, 11976, the: State Task Force recom- mended the elimination of the New York City 8c cigaret tax and the reduct'i'on from 15c to~ 14c of the State tax, plus licensing and control in order t'o, eiimr inatle bootlegging as well as provide $7 million of' revenue beyond the revenues lost to the city and state. Bills to accomplish the tax reduct'ion and licensing with proper safeguards: to the city and state have been introduced in the State Legislature,, but have not been passed byboth houses and signed by the governor. The legitimate wholesale tobacco indust'ry in New York hasof'fered'to putl $15: million into an escrowaccountt~o, cover any shortfall l in t~axrevenues. Thi's, is firm evidence that the state will receive all re- venues d'ue it as a result of'~ this bill. (Morris Weint'raub, is a consu,ltant to the Neur XorkState Special TaskF''orceon, C''igaret' Bootleg- ging and the Cigaret Tax.) Q3635110i