Many New Yorkers head to tribal stores to escape $1.60-per-pack state increase.
Customers wait in line for cigarettes and other items Friday in Verona at the SavOn convenience store, which is run by the Oneida Indian Nation. Some smokers say they've turned to tax-free cigarettes at tribal stores following the state's recent tax increase of $1.60 a pack. Pictured (from left to right) are salesperson Mike Hopper, of Rome; Nicole Shaw, of Utica; Dylan Williams, of Waterville; John Bawarski, of Whitesboro; Dustin Trotz, of Verona, and Danielle Swenszkowski, of Utica. Syracuse, NY -- Julie Squadrito has improvised since New York jacked up the cigarette tax from $2.75 to a nation-leading $4.35 per pack July 1.
Squadrito, of Lyncourt, pools her money with co-workers at a communications company in downtown Syracuse, where she is a manager. Every other week, she said, one of them drives seven miles to the Onondaga Nation Smoke Shop, which sells untaxed cigarettes.
In New York, the average state, federal and local tax on a pack of 20 cigarettes is now $6.02. That includes an 8 percent combined state and local sales tax, as well as a $1.01 federal excise tax, according to the state tax department.
New York raised its tax $1.60 a pack to generate $260 million to help offset a $9.2 billion budget gap.
The higher tax also pleases anti-smoking advocates, who say it will make New Yorkers healthier. But instead of quitting, Squadrito is buying her cigarettes on the Nation’s shop on Route 11. She stopped buying Marlboros at Lucky 7 at Teall Avenue and Court Street after the tax increase.
The New York Association of Convenience Stores said field reports show its members lost an average of 25 to 35 percent of their cigarette business in July, with those closest to state borders and tribal lands losing up to 45 percent of their business, said President Jim Calvin. It has also affected the number of customers going to convenience stores in general, causing a loss in non-cigarette sales, he said.
“This tax is only hurting New York State businesses,” said Squadrito, who has smoked for 32 years. “I plan on quitting soon, hopefully, but for right now I just buy the cheaper ones.”
And because cigarettes manufactured by Indian nations are so much cheaper, she’s also switched to Seneca brand, manufactured by the Western New York nation.
She’s not the only one. A manager of Lucky 7 said she’s losing business because the state “has gone crazy” with its taxes.
“It’s becoming a bigger problem,” manager Holly Massey said. “People who were buying three packs a day are now buying three packs a week. And it’s sending people to the Indian reservations.”
A pack of Marlboros hovered around $6 or $7 a pack at Lucky 7 before the tax hike. Now, a pack costs $9.60. The store’s cheapest, Grand Prix, costs $7.95 a pack and its most expensive, Carlton, checks in at $11.05 a pack.
A pack of Senecas? $3.50 at the Onondaga Nation Smoke Shop. That’s $2.52 less than the tax alone on the average pack of non-Nation cigarettes. A pack of Marlboro’s costs $6.50 there.
“It hurts the delis, the small businesses,” said office worker Jennifer Daly. “You can’t afford $9 or $10 a pack.”
Daly, on a cigarette break downtown, said she used to buy at Rite Aid but goes to the Nation since the tax increased.
But starting Sept. 1, a new law could end the sale of unlimited tax-free cigarettes on Native American lands. That might force stores such as the Onondaga Nation shop to raise prices.
If the new law takes effect, Native American nations will be granted only enough tax-exempt cigarettes for their population, based on average cigarette use per person. Additional cigarettes sold to non-Nation customers will be taxed. The additional sales are expected to raise $150 million in taxes.
At the Onondaga Smoke Shop recently, the Seneca brand was wooing new customers with a staffed table at the front door.
Vehicles crammed every spot in the parking lot, and a dozen cars snaked around the building to the shop’s drive-through window. Some parked on the shoulder of Route 11 in front of the store.
The Nation would not release official sales numbers.
But the Cayuga Nation is seeing 50 to 60 percent more cigarette sales at its LakeSide Trading stores in Union Springs and Seneca Falls, said Clint Halftown, the federal representative for the Cayugas. That’s about 1,200 more customers per day than before the tax increase. Some come from as far away as Rochester or Ithaca, he said.
The lot was full one early afternoon at the Cayugas’ store south of the village of Seneca Falls. A steady stream of cars moved between the village and the store, situated near the shore of Cayuga Lake.
At the Oneidas’ SavOn store at the Canastota ramp to the Thruway, people parked in the oversized parking lot to pick up their cigarettes. The Oneida Indian Nation would not comment on how the tax has affected its sales.
The state does not know the impact of taxes on businesses because it relies on data reported by tobacco wholesalers, a tax department spokesman said. That won’t be reported until the end of this quarter, which began July 1.
The last cigarette tax increase went into effect June 3, 2008, when it jumped by $1.25 a pack. Sales on taxable cigarettes that year went down 9 million cartons from the year before, while sales of Native American cigarettes decreased by 4.42 million cartons. The percentage of Native American cigarettes sales remained steady, at about 34 percent of the cigarettes purchased statewide, said tax department spokesman Brad Maione. Cigarette smokers aren’t the only ones feeling the pinch this year.
Starting Aug. 1, the tax on chewing tobacco and cigars increased from 46 percent to 75 percent of the wholesale price. That means the tax on a cigar costing $3 wholesale jumped from $1.38 to $2.25. Cigars are often sold at twice their wholesale value. Therefore, a cigar that used to cost $6 with tax included now costs $6.87.
Snuff is taxed at $2 an ounce, an increase from 96 cents. The tax on little cigar packs increased from 46 percent of the wholesale price to the cigarette rate of $4.36 a pack for 20 little cigars or less, according to the tax department.
Those tax increases are expected to bring in $30 million to the state.
Onondaga County Legislator Bob Warner, R-Van Buren, a longtime anti-smoking advocate, said the tax will help people to cut down on smoking, however slightly.
Despite the huge numbers going to the Native American smoke shops, Warner said, it’s still a deterrent to have to travel down to the Nation to buy cigarettes, especially for those who haven’t started smoking yet.
But Calvin, of the convenience store association, called the tax increase a “policy disaster.”
“Law-abiding stores like ours lose enormous amounts of business, state and local governments lose hundreds of millions in tax revenue, and public health loses because the financial incentive to quit is easily and routinely circumvented,” he said.
Thomas Simmons Sr., of Syracuse, sat near the central bus station smoking a cigarette while on break from his job as a computer technician. He called the tax hike “the stupidest thing the state has ever done,” noting that smoking was still legal.
“It’s cheaper to be a junkie or a drunk than to smoke cigarettes,” he said.