New Cigarette, Soda Tax Proposed in NY Budget

Gov. David Paterson’s budget plan includes an extra $1 billion in tax and fee increases, some of which would have you paying more at your local convenience store.
Paterson plans to use most of the billion dollars in tax hikes to offset health care costs. His budget proposal raises the cigarette tax by $1 to $3.75 a pack. He says it would generate nearly $220 million for the state.
The president of the New York State Association of Convenience Stores, Jim Calvin, says increasing the cigarette tax only drives consumers to places where they don't have to pay it.
“We've reached the point now where half the cigarettes consumed by New Yorkers are purchased without the collection on New York State tax and increasing the tax rate another buck is only going to fuel that cigarette tax evasion epidemic,” said Calvin.
Calvin says cigarette tax evasion has cost New York State about $1 billion a year.
Paterson plans to enforce cigarette tax collection on Indian sales to non-Indians in order to recoup that money.
The governor also wants to tackle the obesity epidemic by putting an excise tax of about one cent per ounce on sugary drinks.
Calvin says tax hikes like these are causing a steep decline in sales for convenience stores.
“We don’t understand why our customers who drink those beverages in moderation should have to be penalized, because some of their neighbors drink them to excess,” said Calvin.
If the legislature approves the governor’s plan, the new taxes would go into effect at the beginning of June.