Seneca cigarette businesses cannot ship cigarettes through the U.S. Postal Service, according to a federal district court ruling last week.
Judge Richard Arcara upheld the mail-order ban contained in the Prevent All Cigarette Trafficking (PACT) Act but temporarily exempted more than 140 Seneca-owned businesses from a provision requiring them to comply with all taxing laws in the places they sell cigarettes, the Associated Press reported.
The order will remain in place while a lawsuit claiming the PACT Act is unconstitutional works its way through the court.
Seneca-owned businesses are estimated to control 80% of the mail order cigarette market in the U.S.
Yesterday, NACS, along with the New York Association of Convenience Stores, submitted its second amicus brief regarding the PACT Act litigation. “The district court erred in enjoining enforcement of provisions of the PACT Act that require Internet sellers of cigarettes and smokeless tobacco products to abide by the laws of the States and localities into which they ship such products, including those jurisdictions’ tax laws,” the brief stated. “Congress overwhelmingly enacted the PACT Act after many years of deliberation and investigation into the myriad ills caused by tax-evading Internet sales of tobacco products.”
Losing Business Across the Border
Since New York hiked up its cigarette tax from $2.75 to $4.35 per pack-the highest in the U.S.-on July 1, convenience stores are reporting decreased business as many customers head to Indian reservations for cheaper tax-free cigarettes.
The New York tax hike is meant to generate $260 million to help offset a $9.2 billion budget gap and makes anti-smoking groups happy, as they hope the higher cost will make people quit.
The New York Association of Convenience Stores said field reports show its members lost an average of 25-35% of their cigarette business in July, with those closest to state borders and tribal lands losing up to 45% of their business, President Jim Calvin told Syracuse.com. It has also affected the number of customers going to convenience stores in general, causing a loss in non-cigarette sales, he added.
At Lucky 7 a pack of Marlboros were priced around $6 or $7 a pack before the tax hike and are now $9.60. The store’s cheapest, Grand Prix, costs $7.95 a pack. Meanwhile, a pack of Senecas run only $3.50 at the Onondaga Nation Smoke Shop. That’s $2.52 less than the TAX on the average pack of non-Nation cigarettes.
If the tax laws stated in the PACT Act take effect, it would end the sale of unlimited tax-free cigarettes on Native American lands. Native American nations would be granted only enough tax-exempt cigarettes for their population, based on average cigarette use per person. Additional cigarettes sold to non-Nation customers would be taxed.