Addressing the National Conference of State Legislatures in New Orleans last week, Mayor Bloomberg cut right to the chase.
New York, he noted, is suffering a serious case of the shorts, due largely to a weakening national economy and a serious Wall Street downturn – while a big pot of money that could provide some relief is being left on the table.
That would be the uncollected taxes on cigarettes sold on Indian reservations.
Thanks to the fundamental cowardice of Govs. George Pataki and Eliot Spitzer (Gov. Paterson is showing yellow, too, but he’s new on the job), New York declined to enforce a state law mandating the collection of taxes on all tobacco products sold to non-tribe members.
As a result, some 300 million packs a year of untaxed cigarettes are moved on New York Indian reservations.
Over the years, Albany has foregone hundreds of millions of dollars in wholly legitimate tax revenue.
Decrying the MTA’s $700 million budget hole, Bloomberg said: “[Collecting those taxes] alone would replace one of those [MTA-proposed] fare increases.”
Leaving aside Bloomberg’s unrelenting efforts to tax smokers to death before their habit kills them, it remains that the numbers bear him out.
As Rep. Peter King (R-LI) pointed out in these pages a few weeks ago: “A 2006 state Department of Health report estimated that New York loses $436 million to $576 million a year in taxes from the sale of untaxed cigarettes alone – a figure that could rise to $800 million-plus this year.”
Whether such money would properly go to plug the MTA’s deficit or for other purposes, this is a huge pool of cash.
And, budgetary imperatives aside, there’s an even stronger reason for collecting the tobacco taxes: It’s the law.
Failure to collect breeds legitimate resentment from New Yorkers who are required to pay their taxes – and understandable anger at a government which quails before one class of scofflaw while relentlessly dunning them.
Kudos to Mayor Mike for raising the issue.
We trust he will return to it as the MTA fare debate proceeds.